Annual report pursuant to Section 13 and 15(d)

COMMON AND PREFERRED STOCK

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COMMON AND PREFERRED STOCK
12 Months Ended
Dec. 31, 2014
COMMON AND PREFERRED STOCK [Abstract]  
COMMON AND PREFERRED STOCK
NOTE 5     COMMON AND PREFERRED STOCK

The Company’s Articles of Incorporation authorize the issuance of up to 100,000,000 shares.  The shares are classified in two classes, consisting of 95,000,000 shares of common stock, par value $.001 per share, and 5,000,000 shares of preferred stock, par value $.001 per share.  The board of directors is authorized to establish one or more series of preferred stock, setting forth the designation of each such series, and fixing the relative rights and preferences of each such series.  The Company has neither designated nor issued any shares of preferred stock.

Common Stock

The following is a schedule of changes in the number of shares of common stock outstanding since the beginning of 2012:

   
Year Ended December 31,
 
   
2014
   
2013
   
2012
 
Beginning Balance
    61,858,199       63,532,622       63,330,421  
         Stock Based Compensation
    -       57,371       53,140  
Stock Options Exercised
    100,000       10,091       10,500  
Restricted Stock Grants (Note 6)
    299,416       353,596       837,239  
Stock Repurchased
    (1,153,885 )     (2,036,383 )     -  
Other Surrenders
    (79,461 )     (59,098 )     (698,678 )
Other
    42,443       -       -  
Ending Balance
    61,066,712       61,858,199       63,532,622  

2014 Activity

In 2014, 43,835 shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards.  The total value of these shares was approximately $587,000, which was based on the market price on the date the shares were surrendered.

In 2014, a former director of the Company exercised an aggregate of 100,000 stock options, which were granted in 2007.  Of those stock options, 35,626 shares were surrendered to cover the aggregate exercise price of approximately $518,000, based on the market price on the date the shares were surrendered.

In 2014, there was an increase in common stock of 42,443 shares, included as Other within the table above, to reflect an immaterial adjustment related to a prior period, to correct the Company’s total common shares outstanding that were on record as of December 31, 2014.
 
2013 Activity

In 2013, the Company’s Chief Executive Officer received shares of common stock as compensation in lieu of any cash base salary.  In 2013, the Company issued 57,371 shares valued at approximately $825,000 to the Chief Executive Officer as compensation in lieu of any cash base salary.

In 2013, 16,585 shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards.  The total value of these shares was approximately $253,000, which was based on the market price on the date the shares were surrendered.

In 2013, 39,049 shares of restricted common stock were surrendered by employees who terminated employment with the Company.

In 2013, a director of the Company exercised an aggregate of 10,091 stock options, which were granted in 2007.  Of those stock options, 3,464 shares were surrendered to cover the aggregate exercise price of approximately $52,000, based on the market price on the date the shares were surrendered.

2012 Activity

In 2012, a director of the Company exercised an aggregate of 10,500 stock options granted in 2007.

In 2012, the Company issued 53,140 shares of common stock in aggregate to executives and employees of the Company as compensation for their services.  The shares were fully vested on the date of the grant.  The fair value of the stock issued was approximately $1.3 million.  The value of the stock was between $19.34 and $24.89 per share, the market value of the shares of common stock on the date the stock was issued.  The Company expensed approximately $0.5 million in share-based compensation related to these fully vested shares in the year ended December 31, 2012.  The remainder of fair value was capitalized into the full cost pool.

In 2012, 70,128 shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards.  The total value of these shares was approximately $1.5 million, which was based on the market price on the date the shares were surrendered.

In 2012, 628,550 shares of common stock were surrendered by certain employees who terminated employment with the Company in connection with their restricted stock awards.

Stock Repurchase Program

In May 2011, the Company’s board of directors approved a stock repurchase program to acquire up to $150 million of the Company’s outstanding common stock.  The stock repurchase program allows the Company to repurchase its shares from time to time in the open market, block transactions and in negotiated transactions.

During the third quarter of 2013, the Company repurchased 2,036,383 shares of its common stock under the stock repurchase program.  This stock had a cost of approximately $26.1 million.  During the first quarter of 2014, the Company repurchased 1,018,897 shares of its common stock under the stock repurchase program.  This stock had a cost of approximately $13.7 million.  During the fourth quarter of 2014, the Company repurchased 134,988 shares of its common stock under the stock repurchase program. This stock had a cost of approximately $1.8 million.  All repurchased shares are included in the Company’s pool of authorized but unissued shares.  The Company’s accounting policy upon the repurchase of shares is to deduct its par value from Common Stock and to reflect any excess of cost over par value as a deduction from Additional Paid-in Capital.

Performance Equity Awards

In 2014, certain of the Company’s executive officers were granted performance equity awards under the 2014 long-term equity incentive program adopted by the compensation committee.  Entitlement to the performance shares will be based on the Company’s 2014 performance relative to established performance goals for proved reserve growth, debt-adjusted proved reserve value per share and year-over-year growth in average stock price relative to a selected peer group.  Participants may earn from zero to 180 percent of their 2014 base salaries and the amounts earned will be settled in restricted shares of common stock that will vest annually over a subsequent three-year service-based vesting period beginning in 2015.  The maximum dollar amount of the performance shares issuable if all participants earned the maximum award would total $3.1 million.  For the year ended December 31, 2014, the Company has recorded $0.6 million of compensation expense in connection with these performance equity awards.  No such performance equity awards have vested.