þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
72-1133047
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(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification Number)
|
Large accelerated filer þ
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company o
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|||
(Do not check if a smaller reporting company)
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Page
|
||
NEWFIELD EXPLORATION COMPANY | ||||||
CONSOLIDATED BALANCE SHEET
|
||||||
(In millions, except share data)
|
||||||
(Unaudited)
|
||||||
March 31,
2011
|
December 31,
2010
|
|||||
ASSETS
|
||||||
Current assets:
|
||||||
Cash and cash equivalents
|
$ | 56 | $ | 39 | ||
Accounts receivable
|
333 | 354 | ||||
Inventories
|
93 | 79 | ||||
Derivative assets
|
153 | 197 | ||||
Other current assets
|
72 | 62 | ||||
Total current assets
|
707 | 731 | ||||
Property and equipment, at cost, based on the full cost method of accounting for
|
||||||
oil and gas properties ($1,881 and $1,658 were excluded from amortization
|
||||||
at March 31, 2011 and December 31, 2010, respectively)
|
12,835 | 12,399 | ||||
Less ─ accumulated depreciation, depletion and amortization
|
(5,977 | ) | (5,791 | ) | ||
Total property and equipment, net
|
6,858 | 6,608 | ||||
Derivative assets
|
28 | 39 | ||||
Long-term investments
|
52 | 48 | ||||
Deferred taxes
|
31 | 29 | ||||
Other assets
|
40 | 39 | ||||
Total assets
|
$ | 7,716 | $ | 7,494 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||
Current liabilities:
|
||||||
Accounts payable
|
$ | 70 | $ | 92 | ||
Accrued liabilities
|
659 | 670 | ||||
Advances from joint owners
|
41 | 51 | ||||
Asset retirement obligation
|
11 | 11 | ||||
Derivative liabilities
|
148 | 53 | ||||
Deferred taxes
|
2 | 51 | ||||
Total current liabilities
|
931 | 928 | ||||
Other liabilities
|
55 | 56 | ||||
Derivative liabilities
|
133 | 46 | ||||
Long-term debt
|
2,428 | 2,304 | ||||
Asset retirement obligation
|
102 | 97 | ||||
Deferred taxes
|
739 | 720 | ||||
Total long-term liabilities
|
3,457 | 3,223 | ||||
Commitments and contingencies (Note 12)
|
— | — | ||||
Stockholders' equity:
|
||||||
Preferred stock ($0.01 par value, 5,000,000 shares authorized; no shares issued)
|
— | — | ||||
Common stock ($0.01 par value, 200,000,000 shares authorized at March 31, 2011
|
||||||
and December 31, 2010; 136,147,671 and 135,910,641 shares issued at
|
||||||
March 31, 2011 and December 31, 2010, respectively)
|
1 | 1 | ||||
Additional paid-in capital
|
1,459 | 1,450 | ||||
Treasury stock (at cost, 1,703,460 and 1,664,538 shares at March 31, 2011 and
|
||||||
December 31, 2010, respectively)
|
(51 | ) | (41 | ) | ||
Accumulated other comprehensive loss
|
(9 | ) | (12 | ) | ||
Retained earnings
|
1,928 | 1,945 | ||||
Total stockholders' equity
|
3,328 | 3,343 | ||||
Total liabilities and stockholders' equity
|
$ | 7,716 | $ | 7,494 | ||
The accompanying notes to consolidated financial statements are an integral part of this statement.
|
NEWFIELD EXPLORATION COMPANY
|
||||||||
CONSOLIDATED STATEMENT OF INCOME
|
||||||||
(In millions, except per share data)
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended
March 31,
|
||||||||
2011
|
2010
|
|||||||
Oil and gas revenues
|
$ | 545 | $ | 458 | ||||
Operating expenses:
|
||||||||
Lease operating
|
93 | 67 | ||||||
Production and other taxes
|
71 | 25 | ||||||
Depreciation, depletion and amortization
|
166 | 147 | ||||||
General and administrative
|
37 | 36 | ||||||
Other
|
— | 8 | ||||||
Total operating expenses
|
367 | 283 | ||||||
Income from operations
|
178 | 175 | ||||||
Other income (expenses):
|
||||||||
Interest expense
|
(40 | ) | (38 | ) | ||||
Capitalized interest
|
18 | 12 | ||||||
Commodity derivative income (expense)
|
(182 | ) | 237 | |||||
Other
|
(1 | ) | 2 | |||||
Total other income (expense)
|
(205 | ) | 213 | |||||
Income (loss) before income taxes
|
(27 | ) | 388 | |||||
Income tax provision (benefit):
|
||||||||
Current
|
23 | 13 | ||||||
Deferred
|
(33 | ) | 131 | |||||
Total income tax provision (benefit)
|
(10 | ) | 144 | |||||
Net income (loss)
|
$ | (17 | ) | $ | 244 | |||
Earnings (loss) per share:
|
||||||||
Basic
|
$ | (0.13 | ) | $ | 1.87 | |||
Diluted
|
$ | (0.13 | ) | $ | 1.84 | |||
Weighted-average number of shares outstanding for basic earnings (loss) per share
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133 | 130 | ||||||
Weighted-average number of shares outstanding for diluted earnings (loss) per share
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133 | 133 | ||||||
The accompanying notes to consolidated financial statements are an integral part of this statement.
|
NEWFIELD EXPLORATION COMPANY | ||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS
|
||||||||
(In millions)
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended
March 31,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$ | (17 | ) | $ | 244 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||
Depreciation, depletion and amortization
|
166 | 147 | ||||||
Deferred tax provision (benefit)
|
(33 | ) | 131 | |||||
Stock-based compensation
|
6 | 6 | ||||||
Commodity derivative (income) expense
|
182 | (237 | ) | |||||
Cash receipts on derivative settlements, net
|
55 | 102 | ||||||
Other non-cash charges
|
2 | — | ||||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) decrease in accounts receivable
|
21 | (13 | ) | |||||
(Increase) decrease in inventories
|
(12 | ) | 5 | |||||
(Increase) decrease in other current assets
|
(10 | ) | 42 | |||||
Increase in other assets
|
(3 | ) | — | |||||
Decrease in accounts payable and accrued liabilities
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(37 | ) | (16 | ) | ||||
Decrease in advances from joint owners
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(10 | ) | (2 | ) | ||||
Increase (decrease) in other liabilities
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(1 | ) | 5 | |||||
Net cash provided by operating activities
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309 | 414 | ||||||
Cash flows from investing activities:
|
||||||||
Acquisitions of oil and gas properties
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— | (217 | ) | |||||
Additions to oil and gas properties
|
(466 | ) | (340 | ) | ||||
Proceeds from sales of oil and gas properties
|
62 | 2 | ||||||
Additions to furniture, fixtures and equipment
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(3 | ) | (2 | ) | ||||
Redemptions of investments
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— | 1 | ||||||
Net cash used in investing activities
|
(407 | ) | (556 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from borrowings under credit arrangements
|
670 | 198 | ||||||
Repayments of borrowings under credit arrangements
|
(546 | ) | (562 | ) | ||||
Net proceeds from issuance of senior subordinated notes
|
— | 694 | ||||||
Debt issue costs
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— | (8 | ) | |||||
Repayment of senior notes
|
— | (143 | ) | |||||
Proceeds from issuances of common stock
|
7 | 11 | ||||||
Purchases of treasury stock, net
|
(16 | ) | (14 | ) | ||||
Net cash provided by financing activities
|
115 | 176 | ||||||
Increase in cash and cash equivalents
|
17 | 34 | ||||||
Cash and cash equivalents, beginning of period
|
39 | 78 | ||||||
Cash and cash equivalents, end of period
|
$ | 56 | $ | 112 | ||||
The accompanying notes to consolidated financial statements are an integral part of this statement.
|
NEWFIELD EXPLORATION COMPANY | |||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|
|||||||||||||||||||||||||||||||
(In millions)
|
|||||||||||||||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||||||||||||||
Common Stock
|
Treasury Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Stockholders'
Equity
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||||||||||||||
Balance, December 31, 2010
|
135.9 | $ | 1 | (1.7 | ) | $ | (41 | ) | $ | 1,450 | $ | 1,945 | $ | (12 | ) | $ | 3,343 | ||||||||||||||
Issuances of common stock
|
0.2 | — | 7 | 7 | |||||||||||||||||||||||||||
Stock-based compensation
|
8 | 8 | |||||||||||||||||||||||||||||
Treasury stock, net
|
— | (10 | ) | (6 | ) | (16 | ) | ||||||||||||||||||||||||
Comprehensive income (loss):
|
|||||||||||||||||||||||||||||||
Net loss
|
(17 | ) | (17 | ) | |||||||||||||||||||||||||||
Unrealized gain on investments, net of tax of $(1)
|
3 | 3 | |||||||||||||||||||||||||||||
Total comprehensive loss
|
(14 | ) | |||||||||||||||||||||||||||||
Balance, March 31, 2011
|
136.1 | $ | 1 | (1.7 | ) | $ | (51 | ) | $ | 1,459 | $ | 1,928 | $ | (9 | ) | $ | 3,328 | ||||||||||||||
The accompanying notes to consolidated financial statements are an integral part of this statement.
|
Balance as of January 1, 2011
|
$
|
108
|
|||
Accretion expense
|
3
|
||||
Additions
|
2
|
||||
Balance at March 31, 2011
|
$
|
113
|
|||
Less: Current portion of ARO at March 31, 2011
|
(11)
|
||||
Total long-term ARO at March 31, 2011
|
$
|
102
|
Three Months Ended
March 31,
|
|||||||||
2011
|
2010
|
||||||||
(In millions, except per share data) | |||||||||
Income (numerator):
|
|||||||||
Net income (loss) — basic and diluted
|
$ | (17 | ) | $ | 244 | ||||
Weighted-average shares (denominator):
|
|||||||||
Weighted-average shares — basic
|
133 | 130 | |||||||
Dilution effect of stock options and unvested restricted stock
|
|||||||||
and restricted stock units outstanding at end of period (1) (2)
|
— | 3 | |||||||
Weighted-average shares — diluted
|
133 | 133 | |||||||
Earnings (loss) per share:
|
|||||||||
Basic
|
$ | (0.13 | ) | $ | 1.87 | ||||
Diluted
|
$ | (0.13 | ) | $ | 1.84 |
_______________
|
|||||||
(1)
|
The effect of stock options and unvested restricted stock and restricted stock units outstanding has not been included in the calculation of shares outstanding for diluted EPS for the three months ended March 31, 2011 as their effect would have been anti-dilutive. Had we recognized net income for this period, incremental shares attributable to the assumed exercise of outstanding options and the assumed vesting of unvested restricted stock and restricted stock units would have increased diluted weighted-average shares outstanding by two million shares.
|
||||||
(2)
|
The calculation of shares outstanding for diluted EPS for the three months ended March 31, 2010 does not include the effect of one million unvested restricted stock or restricted stock units because to do so would be antidilutive.
|
Three Months Ended
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In millions)
|
||||||||
Net income (loss)
|
$ | (17 | ) | $ | 244 | |||
Unrealized gain on investments, net of tax of ($1)
|
3 | 1 | ||||||
Total comprehensive income (loss)
|
$ | (14 | ) | $ | 245 | |||
March 31,
2011
|
December 31,
2010
|
|||||||
(In millions)
|
||||||||
Oil and gas properties:
|
||||||||
Subject to amortization
|
$ | 10,837 | $ | 10,627 | ||||
Not subject to amortization
|
1,881 | 1,658 | ||||||
Gross oil and gas properties
|
12,718 | 12,285 | ||||||
Accumulated depreciation, depletion and amortization
|
(5,913 | ) | (5,730 | ) | ||||
Net oil and gas properties
|
6,805 | 6,555 | ||||||
Other property and equipment
|
117 | 114 | ||||||
Accumulated depreciation and amortization
|
(64 | ) | (61 | ) | ||||
Net other property and equipment
|
53 | 53 | ||||||
Total property and equipment, net
|
$ | 6,858 | $ | 6,608 | ||||
Costs Incurred In
|
|||||||||||||||||||
2011
|
2010
|
2009
|
2008 and prior
|
Total
|
|||||||||||||||
(In millions)
|
|||||||||||||||||||
Acquisition costs
|
$ | 46 | $ | 376 | $ | 144 | $ | 489 | $ | 1,055 | |||||||||
Exploration costs
|
176 | 201 | 61 | 70 | 508 | ||||||||||||||
Development costs
|
20 | 38 | 16 | 51 | 125 | ||||||||||||||
Fee mineral interests
|
— | — | — | 23 | 23 | ||||||||||||||
Capitalized interest
|
18 | 58 | 51 | 43 | 170 | ||||||||||||||
Total oil and gas properties not subject to amortization
|
$ | 260 | $ | 673 | $ | 272 | $ | 676 | $ | 1,881 | |||||||||
NYMEX Contract Price Per MMBtu
|
||||||||||||||||||||
Collars
|
Estimated
|
|||||||||||||||||||
Swaps
|
Additional Put
|
Floors
|
Ceilings
|
Fair Value
|
||||||||||||||||
Volume in
|
(Weighted
|
Weighted
|
Weighted
|
Weighted
|
Asset
|
|||||||||||||||
Period and Type of Contract
|
MMMBtus
|
Average)
|
Range
|
Average
|
Range
|
Average
|
Range
|
Average
|
(Liability)
|
|||||||||||
(In millions)
|
||||||||||||||||||||
April 2011 – June 2011
|
||||||||||||||||||||
Price swap contracts
|
24,570 | $6.30 | — | — | — | — | — | — | $ | 47 | ||||||||||
3-Way collar contracts
|
10,010 | — | $4.50 | $4.50 | $6.00 | $6.00 | $7.75 - $8.03 | $7.91 | 14 | |||||||||||
July 2011 – September 2011
|
||||||||||||||||||||
Price swap contracts
|
24,840 | 6.30 | — | — | — | — | — | — | 43 | |||||||||||
3-Way collar contracts
|
10,120 | — | 4.50 | 4.50 | 6.00 | 6.00 | 7.75-8.03 | 7.91 | 11 | |||||||||||
October 2011 – December 2011
|
||||||||||||||||||||
Price swap contracts
|
12,030 | 6.03 | — | — | — | — | — | — | 16 | |||||||||||
3-Way collar contracts
|
17,440 | — | 4.50 | 4.50 | 5.50-6.00 | 5.86 | 6.60-8.03 | 7.37 | 14 | |||||||||||
January 2012 – December 2012
|
||||||||||||||||||||
Price swap contracts
|
18,300 | 5.42 | — | — | — | — | — | — | 7 | |||||||||||
3-Way collar contracts
|
83,570 | — | 3.50-4.50 | 4.28 | 5.00-6.00 | 5.49 | 5.20-7.55 | 6.36 | 30 | |||||||||||
January 2013 – December 2013
|
||||||||||||||||||||
Price swap contracts
|
18,250 | 5.33 | — | — | — | — | — | — | (1 | ) | ||||||||||
3-Way collar contracts
|
39,530 | — | 3.50-4.50 | 4.04 | 5.00-6.00 | 5.44 | 6.00- 7.55 | 6.48 | 5 | |||||||||||
$ | 186 |
NYMEX Contract Price Per Bbl
|
||||||||||||||||||||
Collars
|
Estimated
|
|||||||||||||||||||
Swaps
|
Additional Put
|
Floors
|
Ceilings
|
Fair Value
|
||||||||||||||||
Volume in
|
(Weighted
|
Weighted
|
Weighted
|
Weighted
|
Asset
|
|||||||||||||||
Period and Type of Contract
|
MBbls
|
Average)
|
Range
|
Average
|
Range
|
Average
|
Range
|
Average
|
(Liability)
|
|||||||||||
(In millions)
|
||||||||||||||||||||
April 2011 – June 2011
|
||||||||||||||||||||
Price swap contracts
|
910 | $81.51 | — | — | — | — | — | — | $ | (24 | ) | |||||||||
3-Way collar contracts
|
1,365 | — | $60.00-$65.00 | $61.67 | $75.00-$85.00 | $77.67 | $102.25-$121.50 | $107.82 | (9 | ) | ||||||||||
July 2011 – September 2011
|
||||||||||||||||||||
Price swap contracts
|
920 | 81.51 | — | — | — | — | — | — | (24 | ) | ||||||||||
3-Way collar contracts
|
1,380 | — | 60.00-65.00 | 61.67 | 75.00-85.00 | 77.67 | 102.25-121.50 | 107.82 | (13 | ) | ||||||||||
October 2011 – December 2011
|
||||||||||||||||||||
Price swap contracts
|
920 | 81.51 | — | — | — | — | — | — | (24 | ) | ||||||||||
3-Way collar contracts
|
1,564 | — | 60.00-65.00 | 61.47 | 75.00-85.00 | 77.35 | 102.25-121.50 | 107.60 | (18 | ) | ||||||||||
January 2012 – December 2012
|
||||||||||||||||||||
Price swap contracts
|
2,196 | 82.27 | — | — | — | — | — | — | (51 | ) | ||||||||||
3-Way collar contracts
|
8,418 | — | 55.00-65.00 | 60.00 | 75.00-85.00 | 78.70 | 106.30-115.00 | 109.78 | (77 | ) | ||||||||||
January 2013 – December 2013
|
||||||||||||||||||||
3-Way collar contracts
|
4,745 | — | 55.00 | 55.00 | 80.00 | 80.00 | 109.50-111.40 | 110.54 | (35 | ) | ||||||||||
$ | (275 | ) |
Rocky Mountains
|
Mid-Continent
|
Estimated
Fair Value
Asset
(Liability)
|
||||||||||||||||||
Volume in
MMMBtus
|
Weighted-
Average
Differential
|
Volume in
MMMBtus
|
Weighted-
Average
Differential
|
|||||||||||||||||
(In millions)
|
||||||||||||||||||||
April 2011 – June 2011
|
1,320 | $ | (0.95 | ) | 1,820 | $ | (0.55 | ) | $ | (1 | ) | |||||||||
July 2011 – September 2011
|
1,320 | (0.95 | ) | 2,440 | (0.55 | ) | (1 | ) | ||||||||||||
October 2011 – December 2011
|
1,320 | (0.95 | ) | 4,290 | (0.55 | ) | (2 | ) | ||||||||||||
January 2012 – December 2012
|
4,920 | (0.91 | ) | 18,300 | (0.55 | ) | (7 | ) | ||||||||||||
$ | (11 | ) | ||||||||||||||||||
March 31,
|
December 31,
|
||||||||||
Type of Contract |
Balance Sheet Location
|
2011
|
2010
|
||||||||
(In millions)
|
|||||||||||
Derivatives not designated as hedging instruments: | |||||||||||
Natural gas contracts
|
Derivative assets – current
|
$ | 157 | $ | 201 | ||||||
Oil contracts
|
Derivative assets – current
|
— | 1 | ||||||||
Basis contracts
|
Derivative assets – current
|
(4 | ) | (5 | ) | ||||||
Natural gas contracts
|
Derivative assets – noncurrent
|
30 | 45 | ||||||||
Basis contracts
|
Derivative assets – noncurrent
|
(2 | ) | (6 | ) | ||||||
Oil contracts
|
Derivative liabilities – current
|
(145 | ) | (53 | ) | ||||||
Basis contracts
|
Derivative liabilities – current
|
(3 | ) | — | |||||||
Natural gas contracts
|
Derivative liabilities – noncurrent
|
(1 | ) | (4 | ) | ||||||
Oil contracts
|
Derivative liabilities – noncurrent
|
(130 | ) | (42 | ) | ||||||
Basis contracts
|
Derivative liabilities – noncurrent
|
(2 | ) | — | |||||||
Total
|
$ | (100 | ) | $ | 137 | ||||||
Three Months Ended
|
||||||||||
Location of Gain/(Loss)
|
March 31,
|
|||||||||
Type of Contract
|
Recognized in Income
|
2011
|
2010
|
|||||||
(In millions)
|
||||||||||
Derivatives not designated as hedging instruments:
|
||||||||||
Realized gain on natural gas contracts
|
Commodity derivative income (expense)
|
$ | 68 | $ | 63 | |||||
Realized gain (loss) on oil contracts
|
Commodity derivative income (expense)
|
(12 | ) | 34 | ||||||
Realized loss on basis contracts
|
Commodity derivative income (expense)
|
(1 | ) | (2 | ) | |||||
Total realized gain
|
55 | 95 | ||||||||
Unrealized gain (loss) on natural gas contracts
|
Commodity derivative income (expense)
|
(54 | ) | 190 | ||||||
Unrealized loss on oil contracts
|
Commodity derivative income (expense)
|
(183 | ) | (45 | ) | |||||
Unrealized loss on basis contracts
|
Commodity derivative income (expense)
|
— | (3 | ) | ||||||
Total unrealized gain (loss)
|
(237 | ) | 142 | |||||||
Total
|
$ | (182 | ) | $ | 237 |
March 31,
2011
|
December 31,
2010
|
|||||
(In millions)
|
||||||
Revenue
|
$ | 215 | $ | 199 | ||
Joint interest
|
100 | 133 | ||||
Other
|
19 | 23 | ||||
Reserve for doubtful accounts
|
(1 | ) | (1 | ) | ||
Total accounts receivable
|
$ | 333 | $ | 354 |
March 31,
2011
|
December 31,
2010
|
|||||
(In millions)
|
||||||
Revenue payable
|
$ | 66 | $ | 69 | ||
Accrued capital costs
|
324 | 327 | ||||
Accrued lease operating expenses
|
50 | 54 | ||||
Employee incentive expense
|
31 | 59 | ||||
Accrued interest on debt
|
43 | 41 | ||||
Taxes payable
|
105 | 81 | ||||
Other
|
40 | 39 | ||||
Total accrued liabilities
|
$ | 659 | $ | 670 |
Level 1:
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
Level 2:
|
Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that we value using observable market data. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data or supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange traded derivatives such as over-the-counter commodity price swaps and certain investments.
|
Level 3:
|
Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). Our valuation models for derivative contracts are primarily industry-standard models (i.e., Black-Scholes) that consider various inputs including: (a) quoted forward prices for commodities, (b) time value, (c) volatility factors, (d) counterparty credit risk and (e) current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Our valuation methodology for investments is a discounted cash flow model that considers various inputs including: (a) the coupon rate specified under the debt instruments, (b) the current credit ratings of the underlying issuers, (c) collateral characteristics and (d) risk adjusted discount rates. Level 3 instruments primarily include derivative instruments, such as basis swaps, commodity options including, price collars, floors and three-way collars (as of March 31, 2011, our options were comprised of only three-way collars) and some financial investments. Although we utilize third party broker quotes to assess the reasonableness of our prices and valuation techniques, we do not have sufficient corroborating market evidence to support classifying these assets and liabilities as Level 2.
|
Fair Value Measurement Classification
|
||||||||||||||||
Quoted Prices
in Active
Markets for
Identical Assets
or Liabilities
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||
Total
|
||||||||||||||||
(In millions)
|
||||||||||||||||
As of December 31, 2010:
|
||||||||||||||||
Investments available-for-sale:
|
||||||||||||||||
Equity securities
|
$ | 7 | $ | — | $ | — | $ | 7 | ||||||||
Auction rate securities
|
— | — | 30 | 30 | ||||||||||||
Oil and gas derivative swap contracts
|
— | 89 | (11 | ) | 78 | |||||||||||
Oil and gas derivative option contracts
|
— | — | 59 | 59 | ||||||||||||
Total
|
$ | 7 | $ | 89 | $ | 78 | $ | 174 | ||||||||
As of March 31, 2011:
|
||||||||||||||||
Investments available-for-sale:
|
||||||||||||||||
Equity securities
|
$ | 8 | $ | — | $ | — | $ | 8 | ||||||||
Auction rate securities
|
— | — | 34 | 34 | ||||||||||||
Oil and gas derivative swap contracts
|
— | (11 | ) | (11 | ) | (22 | ) | |||||||||
Oil and gas derivative option contracts
|
— | — | (78 | ) | (78 | ) | ||||||||||
Total
|
$ | 8 | $ | (11 | ) | $ | (55 | ) | $ | (58 | ) | |||||
Investments
|
Derivatives
|
Total
|
||||||||||
(In millions)
|
||||||||||||
Balance at January 1, 2010
|
$ | 40 | $ | 159 | $ | 199 | ||||||
Total realized or unrealized gains (losses):
|
||||||||||||
Included in earnings
|
— | (20 | ) | (20 | ) | |||||||
Included in other comprehensive income (loss)
|
1 | — | 1 | |||||||||
Purchases, issuances and settlements
|
(1 | ) | (25 | ) | (26 | ) | ||||||
Transfers in and out of Level 3
|
— | — | — | |||||||||
Balance at March 31, 2010
|
$ | 40 | $ | 114 | $ | 154 | ||||||
Change in unrealized losses included in earnings relating to
|
||||||||||||
investments and derivatives still held at March 31, 2010
|
$ | — | $ | (14 | ) | $ | (14 | ) | ||||
Balance at January 1, 2011
|
$ | 30 | $ | 48 | $ | 78 | ||||||
Total realized or unrealized gains (losses):
|
||||||||||||
Included in earnings
|
— | (123 | ) | (123 | ) | |||||||
Included in other comprehensive income (loss)
|
4 | — | 4 | |||||||||
Purchases, issuances and settlements:
|
||||||||||||
Settlements
|
— | (14 | ) | (14 | ) | |||||||
Transfers in and out of Level 3
|
— | — | — | |||||||||
Balance at March 31, 2011
|
$ | 34 | $ | (89 | ) | $ | (55 | ) | ||||
Change in unrealized losses included in earnings relating to
|
||||||||||||
investments and derivatives still held at March 31, 2011
|
$ | — | $ | (124 | ) | $ | (124 | ) | ||||
March 31,
|
December 31,
|
||||||||
2011
|
2010
|
||||||||
(In millions)
|
|||||||||
6 ⅝% Senior Subordinated Notes due 2014
|
$ | 332 | $ | 333 | |||||
6 ⅝% Senior Subordinated Notes due 2016
|
569 | 568 | |||||||
7 ⅛% Senior Subordinated Notes due 2018
|
648 | 626 | |||||||
6 ⅞% Senior Subordinated Notes due 2020
|
739 | 733 | |||||||
March 31,
2011
|
December 31,
2010
|
|||||||
(In millions)
|
||||||||
Senior unsecured debt:
|
||||||||
Revolving credit facility — LIBOR based loans
|
$ | 250 | $ | 100 | ||||
Money market lines of credit(1)
|
9 | 35 | ||||||
Total senior unsecured debt
|
259 | 135 | ||||||
6 ⅝% Senior Subordinated Notes due 2014
|
325 | 325 | ||||||
6 ⅝% Senior Subordinated Notes due 2016
|
550 | 550 | ||||||
7 ⅛% Senior Subordinated Notes due 2018
|
600 | 600 | ||||||
6 ⅞% Senior Subordinated Notes due 2020
|
694 | 694 | ||||||
Total long-term debt
|
$ | 2,428 | $ | 2,304 |
_______________
|
|||||||||
(1)
|
Because capacity under our credit facility was available to repay borrowings under our money market lines of credit as of the indicated dates, amounts outstanding under these obligations, if any, are classified as long-term.
|
||||||||
Three Months Ended
March 31,
|
||||||
2011
|
2010
|
|||||
(In millions)
|
||||||
Amount computed using the statutory rate
|
$ | (9 | ) | $ | 136 | |
Increase (decrease) in taxes resulting from:
|
||||||
State and local income taxes, net of federal effect
|
(2 | ) | 6 | |||
Net effect of different tax rates in non-U.S. jurisdictions
|
1 | 2 | ||||
Total provision (benefit) for income taxes
|
$ | (10 | ) | $ | 144 |
Three Months Ended
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In millions)
|
||||||||
Total stock-based compensation
|
$ | 8 | $ | 10 | ||||
Capitalized in oil and gas properties
|
(2 | ) | (4 | ) | ||||
Net stock-based compensation expense
|
$ | 6 | $ | 6 | ||||
Number of
Shares
Underlying
Options
|
Weighted-
Average
Exercise Price
per Share
|
Weighted-
Average
Grant Date
Fair Value
per Share
|
Weighted-
Average
Remaining
Contractual
Life
|
Aggregate
Intrinsic
Value(1)
|
||||||||||||
(In millions) |
(In years)
|
(In millions)
|
||||||||||||||
Outstanding at December 31, 2010
|
1.5 | $ | 34.58 | 4.7 | $ | 58 | ||||||||||
Granted
|
— | — | $ | — | ||||||||||||
Exercised
|
(0.2 | ) | 31.06 | 10 | ||||||||||||
Forfeited
|
— | — | ||||||||||||||
Outstanding at March 31, 2011
|
1.3 | $ | 35.16 | 4.5 | $ | 53 | ||||||||||
Exercisable at March 31, 2011
|
1.1 | $ | 33.10 | 4.2 | $ | 49 |
_______________
|
||||||||||||||
(1)
|
The intrinsic value of a stock option is the amount by which the market value of our common stock at the indicated date, or at the time of exercise, exceeds the exercise price of the option. |
Service-Based
Shares
|
Performance/
Market-Based
Shares
|
Total Shares
|
Weighted-Average
Grant Date Fair
Value per Share
|
||||||||||||
(In millions, except per share data)
|
|||||||||||||||
Non-vested shares outstanding at December 31, 2010
|
2.2 | 0.3 | 2.5 | $ | 36.84 | ||||||||||
Granted
|
0.4 | 0.1 | 0.5 | 67.58 | |||||||||||
Forfeited
|
(0.1 | ) | — | (0.1 | ) | 40.67 | |||||||||
Vested
|
(0.6 | ) | (0.1 | ) | (0.7 | ) | 32.18 | ||||||||
Non-vested shares outstanding at March 31, 2011
|
1.9 | 0.3 | 2.2 | $ | 45.93 | ||||||||||
Three Months Ended March 31, 2011:
|
|||||||||||||||||||
Domestic
|
Malaysia
|
China
|
Other
International
|
Total
|
|||||||||||||||
(In millions)
|
|||||||||||||||||||
Oil and gas revenues
|
$ | 394 | $ | 134 | $ | 17 | $ | — | $ | 545 | |||||||||
Operating expenses:
|
|||||||||||||||||||
Lease operating
|
77 | 15 | 1 | — | 93 | ||||||||||||||
Production and other taxes
|
15 | 51 | 5 | — | 71 | ||||||||||||||
Depreciation, depletion and amortization
|
137 | 25 | 4 | — | 166 | ||||||||||||||
General and administrative
|
36 | 1 | — | — | 37 | ||||||||||||||
Allocated income taxes
|
47 | 16 | 2 | — | |||||||||||||||
Net income from oil and gas properties
|
$ | 82 | $ | 26 | $ | 5 | $ | — | |||||||||||
Total operating expenses
|
367 | ||||||||||||||||||
Income from operations
|
178 | ||||||||||||||||||
Interest expense, net of interest income, capitalized interest and other
|
(23 | ) | |||||||||||||||||
Commodity derivative expense
|
(182 | ) | |||||||||||||||||
Loss before income taxes
|
$ | (27 | ) | ||||||||||||||||
Total long-lived assets
|
$ | 6,200 | $ | 422 | $ | 183 | $ | — | $ | 6,805 | |||||||||
Additions to long-lived assets
|
$ | 422 | $ | 41 | $ | 10 | $ | — | $ | 473 |
Three Months Ended March 31, 2010:
|
|||||||||||||||||||
Other
International
|
|||||||||||||||||||
Domestic
|
Malaysia
|
China
|
Total
|
||||||||||||||||
(In millions)
|
|||||||||||||||||||
Oil and gas revenues
|
$ | 359 | $ | 84 | $ | 15 | $ | — | $ | 458 | |||||||||
Operating expenses:
|
|||||||||||||||||||
Lease operating
|
56 | 10 | 1 | — | 67 | ||||||||||||||
Production and other taxes
|
16 | 7 | 2 | — | 25 | ||||||||||||||
Depreciation, depletion and amortization
|
115 | 25 | 4 | 3 | 147 | ||||||||||||||
General and administrative
|
35 | 1 | — | — | 36 | ||||||||||||||
Other
|
8 | — | — | — | 8 | ||||||||||||||
Allocated income taxes
|
47 | 16 | 2 | — | |||||||||||||||
Net income (loss) from oil and gas properties
|
$ | 82 | $ | 25 | $ | 6 | $ | (3 | ) | ||||||||||
Total operating expenses
|
283 | ||||||||||||||||||
Income from operations
|
175 | ||||||||||||||||||
Interest expense, net of interest income, capitalized interest and other
|
(24 | ) | |||||||||||||||||
Commodity derivative income
|
237 | ||||||||||||||||||
Income before income taxes
|
$ | 388 | |||||||||||||||||
Total long-lived assets
|
$ | 5,078 | $ | 392 | $ | 159 | $ | — | $ | 5,629 | |||||||||
Additions to long-lived assets
|
$ | 525 | $ | 42 | $ | 8 | $ | — | $ | 575 |
•
|
the amount of cash flow available for capital expenditures;
|
|
•
|
our ability to borrow and raise additional capital;
|
|
•
|
the quantity of oil and gas that we can economically produce; and
|
|
•
|
the accounting for our oil and gas activities including among other items, the determination of ceiling test writedowns.
|
•
|
the quantity of our proved oil and gas reserves;
|
|
•
|
the timing of future drilling, development and abandonment activities;
|
|
•
|
the cost of these activities in the future;
|
|
•
|
the fair value of the assets and liabilities of acquired companies;
|
|
•
|
the fair value of our financial instruments including derivative positions; and
|
|
•
|
the fair value of stock-based compensation.
|
Three Months Ended
March 31,
|
Percentage
Increase
(Decrease)
|
|||||||||||
2011
|
2010
|
|||||||||||
Production:(1)(2)
|
||||||||||||
Domestic:
|
||||||||||||
Natural gas (Bcf)
|
43.6 | 44.5 | (2 | )% | ||||||||
Oil, condensate and NGLs (MBbls)
|
2,873 | 2,157 | 33 | % | ||||||||
Total (Bcfe)
|
60.8 | 57.4 |
6
|
% | ||||||||
International:
|
||||||||||||
Oil, condensate and NGLs (MBbls)
|
1,492 | 1,402 | 6 | % | ||||||||
Total (Bcfe)
|
9.0 | 8.4 | 6 | % | ||||||||
Total:
|
||||||||||||
Natural gas (Bcf)
|
43.6 | 44.5 | (2 | )% | ||||||||
Oil, condensate and NGLs (MBbls)
|
4,365 | 3,559 | 23 | % | ||||||||
Total (Bcfe)
|
69.8 | 65.8 | 6 | % | ||||||||
Average Realized Prices: (2) (3)
|
||||||||||||
Domestic:
|
||||||||||||
Natural gas (per Mcf)
|
$ | 4.00 | $ | 4.93 | (19 | )% | ||||||
Oil, condensate and NGLs (MBbls)
|
75.83 | 64.32 | 18 | % | ||||||||
Natural gas equivalent (per Mcfe)
|
6.47 | 6.26 | 3 | % | ||||||||
International:
|
||||||||||||
Oil, condensate and NGLs (MBbls)
|
$ | 101.22 | $ | 70.50 | 44 | % | ||||||
Natural gas equivalent (per Mcfe)
|
16.87 | 11.75 | 44 | % | ||||||||
Total:
|
||||||||||||
Natural gas (per Mcf)
|
$ | 4.00 | $ | 4.93 | (19 | )% | ||||||
Oil, condensate and NGLs (MBbls)
|
84.51 | 66.76 | 27 | % | ||||||||
Natural gas equivalent (per Mcfe)
|
7.81 | 6.96 | 12 | % |
_______________
|
||||||||||
(1)
|
Represents volumes lifted and sold regardless of when produced. Excludes natural gas produced and consumed in our operations of 1.7 Bcfe and 1.2 Bcfe during the first quarters of 2011 and 2010, respectively.
|
|||||||||
(2)
|
Historically, natural gas liquids (NGLs) volumes have been included with reported natural gas production. Effective January 1, 2011, NGLs are reported in barrels and included with total oil and condensate production. As such, all NGL production volumes for periods prior to 2011 have been reclassified and average realized prices updated for comparability between periods.
|
|||||||||
(3)
|
Had we included the effects of hedging contracts not designated for hedge accounting, our average realized price for total natural gas would have been $5.51 and $6.30 per Mcf for the three months ended March 31, 2011 and 2010, respectively. Our total oil, condensate and NGLs average realized price would have been $81.86 and $76.20 per Bbl for the three months ended March 31, 2011 and 2010, respectively.
|
Unit-of-Production
|
Total Amount
|
|||||||||||||||||||||||
Three Months Ended
|
Percentage
|
Three Months Ended
|
Percentage
|
|||||||||||||||||||||
March 31,
|
Increase
|
March 31,
|
Increase
|
|||||||||||||||||||||
2011
|
2010
|
(Decrease)
|
2011
|
2010
|
(Decrease)
|
|||||||||||||||||||
(Per Mcfe)
|
(In millions)
|
|||||||||||||||||||||||
Domestic:
|
||||||||||||||||||||||||
Lease operating
|
$ | 1.26 | $ | 0.97 | 30 | % | $ | 77 | $ | 56 | 37 | % | ||||||||||||
Production and other taxes
|
0.25 | 0.27 | (7 | )% | 15 | 16 | — | |||||||||||||||||
Depreciation, depletion and amortization
|
2.26 | 2.01 | 12 | % | 137 | 115 | 19 | % | ||||||||||||||||
General and administrative
|
0.60 | 0.62 | (3 | )% | 36 | 35 | 2 | % | ||||||||||||||||
Other
|
— | 0.14 | (100 | )% | — | 8 | (100 | )% | ||||||||||||||||
Total operating expenses
|
4.37 | 4.01 | 9 | % | 265 | 230 | 15 | % | ||||||||||||||||
International:
|
||||||||||||||||||||||||
Lease operating
|
$ | 1.89 | $ | 1.34 | 41 | % | $ | 16 | $ | 11 | 50 | % | ||||||||||||
Production and other taxes
|
6.20 | 1.10 | 464 | % | 56 | 9 | 498 | % | ||||||||||||||||
Depreciation, depletion and amortization
|
3.18 | 3.82 | (16 | )% | 29 | 32 | (11 | )% | ||||||||||||||||
General and administrative
|
0.08 | 0.11 | (27 | )% | 1 | 1 | (24 | )% | ||||||||||||||||
Total operating expenses
|
11.35 | 6.37 | 78 | % | 102 | 53 | 90 | % | ||||||||||||||||
Total:
|
||||||||||||||||||||||||
Lease operating
|
$ | 1.34 | $ | 1.02 | 31 | % | $ | 93 | $ | 67 | 39 | % | ||||||||||||
Production and other taxes
|
1.02 | 0.38 | 168 | % | 71 | 25 | 187 | % | ||||||||||||||||
Depreciation, depletion and amortization
|
2.37 | 2.24 | 6 | % | 166 | 147 | 13 | % | ||||||||||||||||
General and administrative
|
0.53 | 0.55 | (4 | )% | 37 | 36 | 1 | % | ||||||||||||||||
Other
|
— | 0.12 | (100 | )% | — | 8 | (100 | )% | ||||||||||||||||
Total operating expenses
|
5.26 | 4.31 | 22 | % | 367 | 283 | 30 | % |
• |
|
Lease operating expense (LOE) per Mcfe increased primarily due to increased transportation costs resulting from the commencement of firm transportation contracts in our Mid-Continent division and an increase in overall operating and service costs.
|
• |
|
Production and other taxes per Mcfe decreased primarily due to refunds of $5 million ($0.08 per Mcfe) received during the first quarter of 2011 related to production tax exemptions on some of our onshore wells, whereas we received similar refunds of $2 million (0.04 per Mcfe) during the same period of 2010.
|
• |
|
Since late 2009, the shift of our capital investments toward the oil plays in our portfolio has resulted in an increase in our depreciation, depletion and amortization (DD&A) rate. The increase in total DD&A expense is related to the increase in the DD&A rate, coupled with the 6% increase in our production volumes during the first quarter of 2011 compared to the same period of 2010.
|
• |
|
General and administrative (G&A) expense per Mcfe decreased while total G&A costs increased slightly. The decrease in G&A per Mcfe is primarily due to the 6% increase in production volumes during the first quarter of 2011 compared to the same period of 2010. We capitalized $16 million of direct internal costs during each of the first quarters of 2011 and 2010.
|
• |
LOE per Mcfe increased primarily due to fixed production costs associated with the operations of certain of our production sharing contracts (PSCs) in Malaysia and a change in the mix of produced, lifted and sold production from the various PSCs during the first quarter of 2011 compared to the same period of 2010.
|
|
• |
Production and other taxes per Mcfe increased significantly due to an increase, per the terms of the PSCs, in the tax rate per barrel of oil lifted and sold as a result of substantially higher realized oil prices during the first quarter of 2011.
|
Three Months Ended
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In millions)
|
||||||||
Gross interest expense:
|
||||||||
Credit arrangements
|
$ | 1 | $ | 1 | ||||
Senior notes
|
— | 2 | ||||||
Senior subordinated notes
|
38 | 35 | ||||||
Other
|
1 | — | ||||||
Total gross interest expense
|
40 | 38 | ||||||
Capitalized interest
|
(18 | ) | (12 | ) | ||||
Net interest expense
|
$ | 22 | $ | 26 |
•
|
spent $466 million on oil and gas properties; and
|
•
|
received proceeds of $62 million from sales of oil and gas properties.
|
•
|
borrowed $670 million and repaid $546 million under our credit arrangements;
|
•
|
received proceeds of $7 million from the issuance of shares of our common stock upon the exercise of stock options; and
|
•
|
repurchased $16 million of our common stock surrendered by employees to pay tax withholding upon the vesting of restricted stock and restricted stock unit awards.
|
•
|
borrowed $198 million and repaid $562 million under our credit arrangements;
|
•
|
issued $700 million aggregate principal amount of our 6 ⅞% Senior Subordinated Notes due 2020 at 99.109% of par and paid $8 million in associated debt issue costs;
|
•
|
repaid $143 million of our $175 million aggregate principal amount 7 ⅝% Senior Notes due 2011;
|
•
|
repurchased $14 million of our common stock surrendered by employees to pay tax withholding upon the vesting of restricted stock and restricted stock unit awards; and
|
•
|
received proceeds of $11 million from the issuance of shares of our common stock upon the exercise of stock options.
|
Total
|
Less than
1 Year
|
2-3 Years
|
4-5 Years
|
More than
5 Years
|
|||||||||||||||||
(In millions)
|
|||||||||||||||||||||
Debt:
|
|||||||||||||||||||||
Revolving credit facility
|
$ | 250 | $ | — | $ | 250 | $ | — | $ | — | |||||||||||
Money market lines of credit
|
9 | — | 9 | — | — | ||||||||||||||||
6 ⅝% Senior Subordinated Notes due 2014
|
325 | — | — | 325 | — | ||||||||||||||||
6 ⅝% Senior Subordinated Notes due 2016
|
550 | — | — | — | 550 | ||||||||||||||||
7 ⅛% Senior Subordinated Notes due 2018
|
600 | — | — | — | 600 | ||||||||||||||||
6 ⅞% Senior Subordinated Notes due 2020
|
700 | — | — | — | 700 | ||||||||||||||||
Total debt
|
2,434 | — | 259 | 325 | 1,850 | ||||||||||||||||
Other obligations:
|
|||||||||||||||||||||
Interest payments (1)
|
1,032 | 152 | 298 | 265 | 317 | ||||||||||||||||
Net derivative (assets) liabilities
|
100 | (5 | ) | 105 | — | — | |||||||||||||||
Asset retirement obligations
|
113 | 11 | 19 | 20 | 63 | ||||||||||||||||
Operating leases (2)
|
400 | 140 | 185 | 29 | 46 | ||||||||||||||||
Deferred acquisition payments
|
2 | 2 | — | — | — | ||||||||||||||||
Firm transportation
|
554 | 59 | 142 | 134 | 219 | ||||||||||||||||
Oil and gas activities (3)
|
44 | — | — | — | — | ||||||||||||||||
Total other obligations
|
2,245 | 359 | 749 | 448 | 645 | ||||||||||||||||
Total contractual obligations
|
$ | 4,679 | $ | 359 | $ | 1,008 | $ | 773 | $ | 2,495 |
_______________
|
|||||||||||||||||||||
(1)
|
Interest associated with our revolving credit facility and money market lines of credit was calculated using a weighted-average interest rate of 1.136% at March 31, 2011 and is included through the maturity of the facility.
|
||||||||||||||||||||
(2)
|
Includes non-cancellable agreements for office space and cancellable agreements for drilling rigs and other equipment, as well as certain service contracts. The majority of these obligations are related to contracts for hydraulic well fracturing services and drilling rigs and are included at the gross contractual value. Due to our various working interests where these service contracts will be utilized, it is not feasible to estimate a net contractual obligation. Net payments under these contracts are accounted for as capital additions to our oil and gas properties and could be significantly less than the gross obligation disclosed.
|
||||||||||||||||||||
(3)
|
As is common in the oil and gas industry, we have various contractual commitments pertaining to exploration, development and production activities. We have work-related commitments for, among other things, drilling wells, obtaining and processing seismic data, natural gas transportation, and fulfilling other cash commitments. At March 31, 2011, these work-related commitments totaled $44 million, all of which were attributable to our international business. Actual amounts by maturity are not included because their timing cannot be accurately predicted.
|
Total
|
Less than
1 Year
|
1-3 Years
|
4-5 Years
|
More than
5 Years
|
||||||||||||||||
Gas (MMMBtus)
|
50,398 | 36,648 | 13,750 | — | — | |||||||||||||||
Oil (MBbls)
|
15,299 | 3,111 | 5,333 | 3,655 | 3,200 |
NYMEX Contract Price Per Bbl
|
||||||||||||||||
Collars
|
||||||||||||||||
Additional Puts
|
Floors
|
Ceilings
|
||||||||||||||
Volume in
|
Weighted
|
Weighted
|
Weighted
|
|||||||||||||
Period and Type of Contract
|
MBbls
|
Range
|
Average
|
Range
|
Average
|
Range
|
Average
|
|||||||||
April 2011 – December 2011
|
||||||||||||||||
3-Way collar contracts
|
1,100
|
$90.00
|
$90.00
|
$100.00
|
$100.00
|
$128.50-$129.75 |
$129.01
|
|||||||||
January 2012 – December 2012
|
||||||||||||||||
3-Way collar contracts
|
2,196
|
90.00
|
90.00
|
100.00
|
100.00
|
137.00 - 137.80 |
137.45
|
•
|
oil and gas prices;
|
•
|
general economic, financial, industry or business conditions;
|
•
|
the impact of legislation and governmental regulations;
|
•
|
the impact of regulatory approvals;
|
•
|
the availability of the securities, capital or credit markets and the cost of capital to fund our operations and business strategies;
|
•
|
the ability and willingness of current or potential lenders, hedging contract counterparties, customers, and working interest owners to fulfill their obligations to us or to enter into transactions with us in the future on terms that are acceptable to us;
|
•
|
the availability of refining capacity for the crude oil we produce from our Monument Butte field;
|
•
|
drilling results;
|
•
|
the prices of goods and services;
|
•
|
the availability of drilling rigs and other support services;
|
•
|
labor conditions;
|
•
|
weather conditions, and changes in weather patterns, including adverse conditions and changes in patterns due to climate change;
|
•
|
environmental liabilities that are not covered by an effective indemnity or insurance;
|
•
|
changes in tax rates;
|
•
|
changes in estimates of reserves;
|
•
|
the effect of worldwide energy conservation measures;
|
•
|
the price and availability of, and demand for, competing energy sources; and
|
•
|
the other factors affecting our business described under the caption “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2010.
|
Fixed
Rate Debt
|
Variable
Rate Debt
|
||||||
(In millions)
|
|||||||
Revolving credit facility
|
$ | — | $ | 250 | |||
Money market lines of credit
|
— | 9 | |||||
6 ⅝% Senior Subordinated Notes due 2014
|
325 | — | |||||
6 ⅝% Senior Subordinated Notes due 2016
|
550 | — | |||||
7 ⅛% Senior Subordinated Notes due 2018
|
600 | — | |||||
6 ⅞% Senior Subordinated Notes due 2020
|
694 | — | |||||
Total debt
|
$ | 2,169 | $ | 259 |
Period
|
Total Number of
Shares
Purchased(1)
|
Average Price Paid
per Share
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
|
Maximum Number
(or Approximate
Dollar Value) of
Shares that May Yet
be Purchased Under
the Plans or
Programs
|
|||||||||||||
January 1 - January 31, 2011
|
2,014 | $ | 73.77 | — | — | ||||||||||||
February 1 - February 28, 2011
|
211,979 | 73.83 | — | — | |||||||||||||
March 1 - March 31, 2011
|
2,422 | 71.83 | — | — | |||||||||||||
Total | 216,415 | $ | 73.81 | — | — |
_______________
|
|||||||||||||||||
(1)
|
All of the shares repurchased were surrendered by employees to pay tax withholding upon the vesting of restricted stock awards and restricted stock units. These repurchases were not part of a publicly announced program to repurchase shares of our common stock.
|
Exhibit Number
|
Description
|
|
3.1
|
Second Restated Certificate of Incorporation of Newfield (incorporated by reference to Exhibit 3.1 to Newfield’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-12534))
|
|
3.1.1
|
Certificate of Amendment to Second Restated Certificate of Incorporation of Newfield dated May 15, 1997 (incorporated by reference to Exhibit 3.1.1 to Newfield’s Registration Statement on Form S-3 (Registration No. 333-32582))
|
|
3.1.2
|
Certificate of Amendment to Second Restated Certificate of Incorporation of Newfield dated May 12, 2004 (incorporated by reference to Exhibit 4.2.3 to Newfield’s Registration Statement on Form S-8 (Registration No. 333-116191))
|
|
3.1.3
|
Certificate of Designation of Series A Junior Participating Preferred Stock, par value $0.01 per share, setting forth the terms of the Series A Junior Participating Preferred Stock, par value $0.01 per share (incorporated by reference to Exhibit 3.5 to Newfield’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-12534))
|
|
3.2
|
Amended and Restated Bylaws of Newfield (incorporated by reference to Exhibit 3.2 to Newfield’s Current Report on Form 8-K filed with the SEC on February 6, 2009 (File No. 1-12534))
|
|
10.1*†
|
Form of 2011 Restricted Stock Unit Agreement between Newfield and each of its executive officers dated as of February 11, 2011
|
|
10.2*†
|
Form of 2011 TSR Restricted Stock Unit Agreement between Newfield and each of its executive officers dated as of February 11, 2011
|
|
31.1*
|
Certification of Chief Executive Officer of Newfield pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2*
|
Certification of Chief Financial Officer of Newfield pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1*
|
Certification of Chief Executive Officer of Newfield pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
32.2*
|
Certification of Chief Financial Officer of Newfield pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
**101.INS | XBRL Instance Document | |
**101.SCH | XBRL Schema Document | |
**101.CAL | XBRL Calculation Linkbase Document | |
**101.LAB | XBRL Label Linkbase Document | |
**101.PRE | XBRL Presentation Linkbase Document | |
**101.DEF | XBRL Definition Linkbase Document | |
* | Filed or furnished herewith. |
** | Furnished herewith. |
† | Identifies management contracts and compensatory plans or arrangements. |
NEWFIELD EXPLORATION COMPANY
|
||||||
Date: April 25, 2011
|
By:
|
/s/ TERRY W. RATHERT
|
||||
Terry W. Rathert
|
||||||
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
||||||
Exhibit Number
|
Description
|
|
3.1
|
Second Restated Certificate of Incorporation of Newfield (incorporated by reference to Exhibit 3.1 to Newfield’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-12534))
|
|
3.1.1
|
Certificate of Amendment to Second Restated Certificate of Incorporation of Newfield dated May 15, 1997 (incorporated by reference to Exhibit 3.1.1 to Newfield’s Registration Statement on Form S-3 (Registration No. 333-32582))
|
|
3.1.2
|
Certificate of Amendment to Second Restated Certificate of Incorporation of Newfield dated May 12, 2004 (incorporated by reference to Exhibit 4.2.3 to Newfield’s Registration Statement on Form S-8 (Registration No. 333-116191))
|
|
3.1.3
|
Certificate of Designation of Series A Junior Participating Preferred Stock, par value $0.01 per share, setting forth the terms of the Series A Junior Participating Preferred Stock, par value $0.01 per share (incorporated by reference to Exhibit 3.5 to Newfield’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-12534))
|
|
3.2
|
Amended and Restated Bylaws of Newfield (incorporated by reference to Exhibit 3.2 to Newfield’s Current Report on Form 8-K filed with the SEC on February 6, 2009 (File No. 1-12534))
|
|
10.1*†
|
Form of 2011 Restricted Stock Unit Agreement between Newfield and each of its executive officers dated as of February 11, 2011
|
|
10.2*†
|
Form of 2011 TSR Restricted Stock Unit Agreement between Newfield and each of its executive officers dated as of February 11, 2011
|
|
31.1*
|
Certification of Chief Executive Officer of Newfield pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2*
|
Certification of Chief Financial Officer of Newfield pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1*
|
Certification of Chief Executive Officer of Newfield pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
32.2*
|
Certification of Chief Financial Officer of Newfield pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
**101.INS | XBRL Instance Document | |
**101.SCH | XBRL Schema Document | |
**101.CAL | XBRL Calculation Linkbase Document | |
**101.LAB | XBRL Label Linkbase Document | |
**101.PRE | XBRL Presentation Linkbase Document | |
**101.DEF | XBRL Definition Linkbase Document | |
* | Filed or furnished herewith. |
** | Furnished herewith. |
† | Identifies management contracts and compensatory plans or arrangements. |
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2011 of Newfield Exploration Company (the “Registrant”);
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s Board of Directors (or persons performing the equivalent functions):
|
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
Date: April 25, 2011
|
By:
|
/s/ LEE K. BOOTHBY
|
|
Lee K. Boothby
|
|||
President and Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2011 of Newfield Exploration Company (the “Registrant”);
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s Board of Directors (or persons performing the equivalent functions):
|
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
Date: April 25, 2011
|
By:
|
/s/ TERRY W. RATHERT
|
|
Terry W. Rathert
|
|||
Executive Vice President and Chief Financial Officer
|
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 25, 2011
|
/s/ LEE K. BOOTHBY
|
||
Lee K. Boothby
|
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 25, 2011
|
/s/ TERRY W. RATHERT
|
||
Terry W. Rathert
|
_______________________ |
Awardee
|
|
Date of Award:
|
February 11, 2011
|
|
Vesting Dates:
|
||
First Vesting Date:
|
February 11, 2012
|
|
Second Vesting Date:
|
February 11, 2013
|
|
Third Vesting Date:
|
February 11, 2014
|
|
Number of Restricted Stock Units:
|
_______________
|
|
(a)
|
on the First Vesting Date, the Forfeiture Restrictions shall lapse as to one-third of the Restricted Stock Units subject to this Agreement; and
|
|
(b)
|
on each succeeding Vesting Date, the Forfeiture Restrictions shall lapse as to an additional one-third of the Restricted Stock Units subject to this Agreement, so that on the Third Vesting Date the Forfeiture Restrictions shall lapse as to all of the Restricted Stock Units subject to this Agreement.
|
1.
|
TERMINATION OF EMPLOYMENT/CHANGE OF CONTROL. The following provisions will apply in the event your employment with the Company and all direct and indirect wholly owned subsidiaries (collectively, the “Company Group”) terminates, or a Change of Control of the Company occurs prior to the Third Vesting Date under the Restricted Stock Unit Award Agreement awarded to you (the “Agreement”):
|
2.
|
PROHIBITED ACTIVITY. Notwithstanding any other provision of these Terms and Conditions or the Agreement, if you engage in a “Prohibited Activity,” as described below, while employed by one or more members of the Company Group or within two years after the date your employment with the Company Group terminates, then your right to receive the shares of the Common Stock, to the extent still outstanding at that time, shall be completely forfeited. A "Prohibited Activity" shall be deemed to have occurred, as determined by the Committee in its sole and absolute discretion, if you divulge any non-public, confidential or proprietary information of the Company Group, but excluding information that (a) becomes generally available to the public other than as a result of your public use, disclosure, or fault, or (b) becomes available to you on a non-confidential basis after your employment termination date from a source other than a member of the Company Group prior to the public use or disclosure by you, provided that such source is not bound by a confidentiality agreement or otherwise prohibited from transmitting the information by a contractual, legal or fiduciary obligation.
|
3.
|
TAX WITHHOLDING. To the extent that the receipt of the Restricted Stock Units or the lapse of any forfeiture restrictions results in income, wages or other compensation to you for any income, employment or other tax purposes with respect to which the Company has a withholding obligation, you shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if you fail to do so, the Company is authorized to withhold from any shares of Common Stock issued under the Agreement or from any cash or stock remuneration or other payment then or thereafter payable to you any tax required to be withheld by reason of such taxable income, wages or compensation including (without limitation) shares of the Common Stock sufficient to satisfy the withholding obligation. No shares of Common Stock shall be withheld from the shares issued under the Agreement in excess of the Company’s minimum statutory withholding obligations (determined using the minimum statutory withholding rates required by the relevant tax authorities, including your share of payroll taxes that are applicable to such supplemental taxable income.)
|
4.
|
NONTRANSFERABILITY. The Agreement is not transferable by you otherwise than by will or by the laws of descent and distribution.
|
5.
|
CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to the Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding.
|
6.
|
RESTRICTED STOCK UNITS DO NOT AWARD ANY RIGHTS OF A STOCKHOLDER. You shall not have the voting rights or any of the other rights, powers or privileges of a holder of the Common Stock with respect to the Restricted Stock Units that are awarded hereby. Only after a share of the Common Stock is issued in exchange for a Restricted Stock Unit will you have all of the rights of a stockholder with respect to such share of Common Stock issued in exchange for a Restricted Stock Unit.
|
7.
|
EMPLOYMENT RELATIONSHIP. For purposes of the Agreement, you shall be considered to be in the employment of the Company Group as long as you have an employment relationship with the Company Group. The Committee shall determine any questions as to whether and when there has been a termination of such employment relationship, and the cause of such termination, under the Plan and the Committee’s determination shall be final and binding on all persons.
|
8.
|
NOT AN EMPLOYMENT AGREEMENT. The Agreement is not an employment agreement, and no provision of the Agreement shall be construed or interpreted to create an employment relationship between you and any member of the Company Group or guarantee the right to remain employed by any member of the Company Group for any specified term.
|
9.
|
SECURITIES ACT LEGEND. If you are an officer or affiliate of the Company under the Securities Act of 1933, you consent to the placing on any certificate for the shares of the Common Stock issued under the Agreement an appropriate legend restricting resale or other transfer of such shares except in accordance with such Act and all applicable rules thereunder.
|
10.
|
LIMIT OF LIABILITY. Under no circumstances will any member of the Company Group be liable for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan.
|
11.
|
FUNDING. You shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments which the Company may make to aid it in meeting its obligations under this Agreement. Your right to receive payments under this Agreement shall be no greater than the right to an unsecured general creditor of the Company.
|
12.
|
MISCELLANEOUS. The Agreement is awarded pursuant to and is subject to all of the provisions of the Plan, including amendments to the Plan, if any. In the event of a conflict between these Terms and Conditions and the Plan provisions, the Plan provisions will control. The term “you” and “your” refer to the Awardee named in the Agreement. Capitalized terms that are not defined herein shall have the meanings ascribed to such terms in the Plan or the Agreement.
|
_________________________ |
Awardee
|
Date of Award:
|
__________________, 2011
|
Number of Restricted Stock Units:
|
_______________
|
1.
|
FORFEITURE RESTRICTIONS. If, prior to April 15, 2016, your employment with the Company and all direct and indirect wholly owned subsidiaries (collectively, the “Company Group”) is terminated for any reason (including as described in the last sentence of Paragraph XII(b) of the Plan) other than by reason of your (A) death or Disability or (B) Qualified Retirement, you shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to Forfeiture Restrictions.
|
2.
|
LAPSE OF FORFEITURE RESTRICTIONS. If not previously forfeited, the Forfeiture Restrictions shall lapse as to the Restricted Stock Units as of the 15th day of the month following each Determination Month with respect to that number of Restricted Stock Units that is equal to the total number of Restricted Stock Units multiplied by a fraction, the numerator of which is (a) the number twenty (20) minus (b) the number which is the TSR Rank, and the denominator is the number 20; provided however that if such fraction is greater than or equal to 3/4, it shall be deemed to be one (1.0) and if such fraction is less than 1/4, it shall be deemed to be zero (0), less that number of Restricted Stock Units for which Forfeiture Restrictions shall have previously lapsed, all as determined by the Committee.
|
4.
|
PROHIBITED ACTIVITY. Notwithstanding any other provision of these Terms and Conditions or the Restricted Stock Unit Agreement (the “Agreement”), if you engage in a “Prohibited Activity,” as described below, while employed by one or more members of the Company Group or within two years after the date your employment with the Company Group terminates, then your right to receive the shares of the Common Stock, to the extent still outstanding at that time, shall be completely forfeited. A “Prohibited Activity” shall be deemed to have occurred, as determined by the Committee in its sole and absolute discretion, if you divulge any non-public, confidential or proprietary information of the Company Group, but excluding information that (a) becomes generally available to the public other than as a result of your public use, disclosure, or fault, or (b) becomes available to you on a non-confidential basis after your employment termination date from a source other than a member of the Company Group prior to the public use or disclosure by you, provided that such source is not bound by a confidentiality agreement or otherwise prohibited from transmitting the information by a contractual, legal or fiduciary obligation.
|
5.
|
TAX WITHHOLDING. To the extent that the receipt of the Restricted Stock Units or the lapse of any forfeiture restrictions results in income, wages or other compensation to you for any income, employment or other tax purposes with respect to which the Company has a withholding obligation, you shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if you fail to do so, the Company is authorized to withhold from any shares of Common Stock issued under the Agreement or from any cash or stock remuneration or other payment then or thereafter payable to you any tax required to be withheld by reason of such taxable income, wages or compensation including (without limitation) shares of the Common Stock sufficient to satisfy the withholding obligation. No shares of Common Stock shall be withheld from the shares issued under the Agreement in excess of the Company’s minimum statutory withholding obligations (determined using the minimum statutory withholding rates required by the relevant tax authorities, including your share of payroll taxes that are applicable to such supplemental taxable income.)
|
6.
|
NONTRANSFERABILITY. The Agreement is not transferable by you otherwise than by will or by the laws of descent and distribution.
|
7.
|
CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to the Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding.
|
8.
|
RESTRICTED STOCK UNITS DO NOT AWARD ANY RIGHTS OF A STOCKHOLDER. You shall not have the voting rights or any of the other rights, powers or privileges of a holder of the Common Stock with respect to the Restricted Stock Units that are awarded hereby. Only after a share of the Common Stock is issued in exchange for a Restricted Stock Unit will you have all of the rights of a stockholder with respect to such share of Common Stock issued in exchange for a Restricted Stock Unit.
|
9.
|
EMPLOYMENT RELATIONSHIP. For purposes of the Agreement, you shall be considered to be in the employment of the Company Group as long as you have an employment relationship with the Company Group. The Committee shall determine any questions as to whether and when there has been a termination of such employment relationship, and the cause of such termination, under the Plan and the Committee’s determination shall be final and binding on all persons.
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10.
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NOT AN EMPLOYMENT AGREEMENT. The Agreement is not an employment agreement, and no provision of the Agreement shall be construed or interpreted to create an employment relationship between you and any member of the Company Group or guarantee the right to remain employed by any member of the Company Group for any specified term.
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11.
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SECURITIES ACT LEGEND. If you are an officer or affiliate of the Company under the Securities Act of 1933, you consent to the placing on any certificate for the shares of the Common Stock issued under the Agreement an appropriate legend restricting resale or other transfer of such shares except in accordance with such Act and all applicable rules thereunder.
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12.
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LIMIT OF LIABILITY. Under no circumstances will any member of the Company Group be liable for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan.
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13.
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FUNDING. You shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments which the Company may make to aid it in meeting its obligations under this Agreement. Your right to receive payments under this Agreement shall be no greater than the right to an unsecured general creditor of the Company.
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14.
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MISCELLANEOUS. The Agreement is awarded pursuant to and is subject to all of the provisions of the Plan, including amendments to the Plan, if any. In the event of a conflict between these Terms and Conditions and the Plan provisions, the Plan provisions will control. Capitalized terms that are not defined herein shall have the meanings ascribed to such terms in the Plan or the Agreement.
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