Stock-Based Compensation:

For the years ended December 31, our stock-based compensation consisted of the following:



	2013			2012			2011
	(In millions)
Equity awards	$	48		$	46		$	37
Liability awards	27			1			3
Total stock-based compensation	75			47			40
Capitalized in oil and gas properties	(20		)	(12		)	(11		)
Net stock-based compensation expense	$	55		$	35		$	29

As of December 31, 2013, we had approximately $116 million of total unrecognized stock-based compensation expense related to unvested stock-based compensation awards. The full amount is expected to be recognized within five years.

Equity Awards

Equity awards consist of service-based and performance- or market-based restricted stock units, stock options and stock purchase options under the Employee Stock Purchase Plan.

Stock-based compensation classified as equity awards to employees and non-employee directors are currently granted under the 2011 Omnibus Stock Plan (2011 Plan). The fair value of grants is determined utilizing the Black-Scholes option-pricing model for stock options and a lattice-based model for our performance- and market-based restricted stock and restricted stock units. Compensation expense for equity awards is expected to be recognized on a straight-line basis over the applicable remaining vesting periods.

Shares available for grant under our 2011 Plan are reduced by 1.87 times the number of shares of restricted stock or restricted stock units awarded under the plan and are reduced by 1 times the number of shares subject to stock options awarded under the plan. At December 31, 2013, we had approximately (1) 2.7 million additional shares available for issuance pursuant to our existing plan if all future awards under our 2011 Plan are stock options, or (2) 1.5 million additional shares available for issuance pursuant to our existing plan if all future awards under our 2011 Plan are restricted stock or restricted stock units. Thus far, the majority of the awards under our 2011 Plan have been granted as restricted stock unit awards.

Restricted Stock. At December 31, 2013, our employees held approximately three million shares of non-vested restricted stock and restricted stock units. The vesting of these shares and units is dependent upon the employee’s continued service with our Company. In addition, at December 31, 2013, our employees held 0.7 million shares of restricted stock subject to performance-based vesting criteria (substantially all of which are considered market-based restricted stock under authoritative accounting guidance). We primarily utilize treasury shares when restricted stock is issued or restricted stock units vest.

The table below provides information about restricted stock and restricted stock unit activity for the following years:



	Service-Based Shares		Performance/ Market-Based Shares		Total Shares		Weighted- Average Grant Date Fair Value per Share
	(In thousands, except per share data)
Non-vested shares outstanding at January 1, 2011	2,178		316		2,494		$	36.84
Granted	1,014		130		1,144		64.35
Forfeited	(233	)	—		(233	)	44.79
Vested	(836	)	(89	)	(925	)	34.86
Non-vested shares outstanding at December 31, 2011	2,123		357		2,480		49.52
Granted	1,589		184		1,773		35.29
Forfeited	(364	)	(14	)	(378	)	47.34
Vested	(977	)	(89	)	(1,066	)	41.70
Non-vested shares outstanding at December 31, 2012	2,371		438		2,809		43.31
Granted	2,428		300		2,728		27.24
Forfeited	(605	)	(32	)	(637	)	39.47
Vested	(1,195	)	—		(1,195	)	39.64
Non-vested shares outstanding at December 31, 2013	2,999		706		3,705		$	33.31

The total fair value of restricted stock and restricted stock units that vested during the years ended December 31, 2013, 2012 and 2011 was $47 million, $44 million and $32 million, respectively.

Stock Options. We have granted stock options under several plans. Options generally expire ten years from the date of grant and become exercisable at the rate of 20% per year. The exercise price of options cannot be less than the fair market value per share of our common stock on the date of grant. We issue new shares of stock when stock options are exercised.

The excess tax benefit realized from stock options exercised is recognized as a credit to additional paid-in capital and is calculated as the amount by which the tax deduction we receive exceeds the deferred tax asset associated with recorded stock-based compensation expense. We did not realize an excess tax benefit from stock-based compensation for 2013, 2012 or 2011 because we did not have sufficient taxable income to fully realize the deduction. At December 31, 2013, we had unrecognized net operating losses of $102 million related to stock-based compensation.

The table below provides information about stock option activity for the following years:



	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 thousands)						(In years)	(In millions)
Outstanding at December 31, 2010	1,539		$	34.58			4.7	$	58
Granted	—		—		$	—
Exercised	(446	)	29.54					18
Forfeited	(34	)	46.73
Outstanding at December 31, 2011	1,059		36.31				4.0	7
Granted	—		—		—
Exercised	(94	)	19.52					1
Forfeited	(64	)	36.19
Outstanding at December 31, 2012	901		38.06				3.3	1
Granted	—		—		—
Exercised	(53	)	19.68					1
Forfeited	(161	)	37.26
Outstanding at December 31, 2013	687		$	39.68			1.9	$	—
Exercisable at December 31, 2013	687		$	39.68			1.9	$	—

_________________


(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.

On December 31, 2013, the last reported sales price of our common stock on the New York Stock Exchange was $24.63 per share.

The table below summarizes information about stock options outstanding and exercisable at December 31, 2013:



Options Outstanding					Options Exercisable
Range of Exercise Prices	Number of Shares Underlying Options	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price per Share		Number of Shares Underlying Options	Weighted- Average Exercise Price per Share
	(In thousands)	(In years)			(In thousands)
$22.51 to $27.50	93	0.2	$	24.90	93	$	24.90
27.51 to 35.00	202	0.9	31.03		202	31.03
35.01 to 41.72	31	1.3	38.33		31	38.33
41.73 to 48.45	361	3.0	48.45		361	48.45
	687	1.9	$	39.68	687	$	39.68

Employee Stock Purchase Plan. In May 2010, our stockholders approved the Newfield Exploration Company 2010 Employee Stock Purchase Plan with one million shares of our common stock available for issuance. Pursuant to our employee stock purchase plan, for each six-month period beginning on January 1 or July 1 during the term of the plan, each eligible employee has the opportunity to purchase our common stock for a purchase price equal to 85% of the lesser of the fair market value of our common stock on the first day of the period or the last day of the period. No employee may purchase common stock under the plan valued at more than $25,000 in any calendar year. Employees of our foreign subsidiaries are not eligible to participate in the plan.

During 2013, options to purchase approximately 178,733 shares of our common stock were issued under our employee stock purchase plan. The weighted-average fair value of each option was $6.59 per share. The fair value of the options granted was determined using the Black-Scholes option valuation method assuming no dividends, a risk-free weighted-average interest rate of 0.10%, an expected life of six months and weighted-average volatility of 39.45%. At December 31, 2013, 524,300 shares of our common stock remained available for issuance under the current plan.

During 2012, options to purchase 165,722 shares of our common stock at a weighted-average fair value of $9.86 per share were issued under the plan. The fair value of the options granted was determined using the Black-Scholes option valuation method assuming no dividends, a risk-free weighted-average interest rate of 0.10%, an expected life of six months and weighted-average volatility of 49.43%.

During 2011, options to purchase 85,982 shares of our common stock at a weighted-average fair value of $16.95 per share were issued under the plan. The fair value of the options granted was determined using the Black-Scholes option valuation method assuming no dividends, a risk-free weighted-average interest rate of 0.14%, an expected life of six months and weighted-average volatility of 32.21%.

Liability Awards

Liability awards consist of cash-based performance awards under the Stockholder Value Appreciation Program and cash-settled restricted stock units.

Stockholder Value Appreciation Program. In September 2013, the Compensation and Management Development Committee of the Board approved the Stockholder Value Appreciation Program, to be administered under the 2011 Omnibus Stock Plan. The SVAP pays substantially all full-time domestic, nonexecutive employees a cash payment based on a percentage of salary upon each incremental $5 increase in our 30 calendar day average share price. The first price threshold that would trigger a payment under the SVAP was $27.50. The SVAP’s performance period lasts through December 31, 2015.

Based upon the expected duration of the performance period, the expected remaining payout is $19 million, of which $5 million has been accrued as of December 31, 2013. The total expected cost was determined using a Monte Carlo simulation assuming no dividends, a risk-free weighted-average interest rate of 0.38%, an expected life of two years and an average of implied and historical stock price volatility of 39.3%. In October 2013, the first price threshold of $27.50 was achieved, which led to a cash payment of approximately $13 million that was paid to eligible employees. As of December 31, 2013, we had unrecognized stock-based compensation expense related to the SVAP of approximately $14 million.

Cash-Settled Restricted Stock Units. During 2011 and 2013, we granted cash-settled restricted stock units to employees that vest over three years. The value of the awards, and the associated stock-based compensation expense, is based on the Company’s stock price. During the year ended December 31, 2013, approximately 85,000 cash-settled restricted stock units vested and settled for approximately $2 million. During the year ended, December 31, 2012, approximately 44,000 cash-settled restricted units for approximately $2 million. As of December 31, 2013, 1.2 million cash-settled restricted stock units outstanding and unrecognized stock-based compensation expense of approximately $15 million for cash-settled restricted stock units.