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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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72-1133047
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification Number)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Page
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March 31,
2016 |
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December 31,
2015 |
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ASSETS
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||||||||
Current assets:
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||||
Cash and cash equivalents
|
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$
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537
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|
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$
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5
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Accounts receivable, net
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245
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|
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262
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Inventories
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31
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34
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Derivative assets
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234
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284
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Other current assets
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41
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40
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Total current assets
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1,088
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625
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Oil and gas properties, net — full cost method ($900 and $780 were excluded from amortization at March 31, 2016 and December 31, 2015, respectively)
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3,403
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3,819
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Other property and equipment, net
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170
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172
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Derivative assets
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65
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105
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Long-term investments
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21
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20
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Other assets
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30
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27
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Total assets
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$
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4,777
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$
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4,768
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LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
Current liabilities:
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Accounts payable
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$
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49
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$
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41
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Accrued liabilities
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398
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533
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Advances from joint owners
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51
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58
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Asset retirement obligations
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3
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2
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Derivative liabilities
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24
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13
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Total current liabilities
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525
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647
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Other liabilities
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59
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48
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Derivative liabilities
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7
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9
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Long-term debt
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2,429
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2,467
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Asset retirement obligations
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193
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192
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Deferred taxes
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26
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26
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Total long-term liabilities
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2,714
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2,742
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Commitments and contingencies (Note
11
)
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Stockholders' equity:
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Preferred stock ($0.01 par value, 5,000,000 shares authorized; no shares issued)
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—
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—
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Common stock ($0.01 par value, 300,000,000 shares authorized at March 31, 2016 and December 31, 2015; 198,823,081 and 164,102,786 shares issued at March 31, 2016 and December 31, 2015, respectively)
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2
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2
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Additional paid-in capital
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3,221
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2,436
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Treasury stock (at cost, 685,517 and 612,469 shares at March 31, 2016 and December 31, 2015, respectively)
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(24
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)
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(22
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)
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Accumulated other comprehensive gain (loss)
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(2
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)
|
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(2
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)
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Retained earnings (deficit)
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(1,659
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)
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(1,035
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)
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Total stockholders' equity
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1,538
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1,379
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Total liabilities and stockholders' equity
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$
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4,777
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$
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4,768
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Three Months Ended
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||||||
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March 31,
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||||||
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2016
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2015
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Oil, gas and NGL revenues
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$
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284
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$
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349
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Operating expenses:
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Lease operating
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61
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75
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Transportation and processing
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63
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49
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Production and other taxes
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10
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13
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Depreciation, depletion and amortization
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177
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237
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General and administrative
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44
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63
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Ceiling test and other impairments
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506
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792
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Other
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1
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4
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Total operating expenses
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862
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1,233
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Income (loss) from operations
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(578
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)
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(884
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)
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Other income (expense):
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Interest expense
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(41
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)
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(44
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)
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Capitalized interest
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9
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7
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Commodity derivative income (expense)
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(17
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)
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153
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Other, net
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1
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8
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Total other income (expense)
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(48
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)
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124
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Income (loss) before income taxes
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(626
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)
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(760
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)
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Income tax provision (benefit):
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Current
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(2
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)
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3
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Deferred
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—
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(283
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)
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Total income tax provision (benefit)
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(2
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)
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(280
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)
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Net income (loss)
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$
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(624
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)
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$
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(480
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)
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Earnings (loss) per share:
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Basic
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$
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(3.52
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)
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$
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(3.30
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)
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Diluted
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$
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(3.52
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)
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$
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(3.30
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)
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Weighted-average number of shares outstanding for basic earnings (loss) per share
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177
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145
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Weighted-average number of shares outstanding for diluted earnings (loss) per share
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177
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145
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Three Months Ended
March 31, |
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2016
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2015
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Net income (loss)
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$
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(624
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)
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$
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(480
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)
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Other comprehensive income (loss):
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Unrealized gain (loss) on investments, net of tax
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—
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—
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Other comprehensive income (loss), net of tax
|
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—
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—
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Comprehensive income (loss)
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$
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(624
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)
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$
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(480
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)
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Three Months Ended
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||||||
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March 31,
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||||||
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2016
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2015
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Cash flows from operating activities:
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||||||
Net income (loss)
|
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$
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(624
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)
|
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$
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(480
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)
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Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
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Depreciation, depletion and amortization
|
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177
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237
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Deferred tax provision (benefit)
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—
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(283
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)
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Stock-based compensation
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8
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15
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Unrealized (gain) loss on derivative contracts
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99
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(32
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)
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Ceiling test and other impairments
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506
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792
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Other, net
|
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4
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6
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Changes in operating assets and liabilities:
|
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(Increase) decrease in accounts receivable
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15
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38
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|
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(Increase) decrease in inventories
|
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(4
|
)
|
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2
|
|
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(Increase) decrease in other current assets
|
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(1
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)
|
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4
|
|
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(Increase) decrease in other assets
|
|
(4
|
)
|
|
1
|
|
||
Increase (decrease) in accounts payable and accrued liabilities
|
|
(102
|
)
|
|
(105
|
)
|
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Increase (decrease) in advances from joint owners
|
|
(6
|
)
|
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14
|
|
||
Increase (decrease) in other liabilities
|
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4
|
|
|
(4
|
)
|
||
Net cash provided by (used in) operating activities
|
|
72
|
|
|
205
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Additions to oil and gas properties
|
|
(273
|
)
|
|
(511
|
)
|
||
Acquisitions of oil and gas properties
|
|
(1
|
)
|
|
—
|
|
||
Proceeds from sales of oil and gas properties
|
|
3
|
|
|
29
|
|
||
Additions to other property and equipment
|
|
(4
|
)
|
|
(4
|
)
|
||
Net cash provided by (used in) investing activities
|
|
(275
|
)
|
|
(486
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
|
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Proceeds from borrowings under credit arrangements
|
|
536
|
|
|
701
|
|
||
Repayments of borrowings under credit arrangements
|
|
(575
|
)
|
|
(1,147
|
)
|
||
Proceeds from issuance of senior notes
|
|
—
|
|
|
691
|
|
||
Debt issue costs
|
|
—
|
|
|
(8
|
)
|
||
Proceeds from issuances of common stock, net
|
|
776
|
|
|
815
|
|
||
Purchases of treasury stock, net
|
|
(2
|
)
|
|
(1
|
)
|
||
Other
|
|
—
|
|
|
(1
|
)
|
||
Net cash provided by (used in) financing activities
|
|
735
|
|
|
1,050
|
|
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Increase (decrease) in cash and cash equivalents
|
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532
|
|
|
769
|
|
||
Cash and cash equivalents, beginning of period
|
|
5
|
|
|
14
|
|
||
Cash and cash equivalents, end of period
|
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$
|
537
|
|
|
$
|
783
|
|
|
|
|
|
|
|
|
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|
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Additional
Paid-in
Capital
|
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Retained Earnings
(Deficit)
|
|
Accumulated
Other
Comprehensive
Gain (Loss)
|
|
Total
Stockholders' Equity
|
||||||||||||||
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Common Stock
|
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Treasury Stock
|
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Shares
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Amount
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Shares
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Amount
|
|
|||||||||||||||||||||
Balance, December 31, 2015
|
|
164.1
|
|
|
$
|
2
|
|
|
(0.6
|
)
|
|
$
|
(22
|
)
|
|
$
|
2,436
|
|
|
$
|
(1,035
|
)
|
|
$
|
(2
|
)
|
|
$
|
1,379
|
|
Issuances of common stock
|
|
34.7
|
|
|
—
|
|
|
|
|
|
|
776
|
|
|
|
|
|
|
776
|
|
||||||||||
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
9
|
|
||||||||||||
Treasury stock, net
|
|
|
|
|
|
(0.1
|
)
|
|
(2
|
)
|
|
—
|
|
|
|
|
|
|
(2
|
)
|
||||||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
(624
|
)
|
|
|
|
(624
|
)
|
||||||||||||
Balance, March 31, 2016
|
|
198.8
|
|
|
$
|
2
|
|
|
(0.7
|
)
|
|
$
|
(24
|
)
|
|
$
|
3,221
|
|
|
$
|
(1,659
|
)
|
|
$
|
(2
|
)
|
|
$
|
1,538
|
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
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(In millions)
|
||||||
Revenue
|
|
$
|
97
|
|
|
$
|
94
|
|
Joint interest
|
|
119
|
|
|
125
|
|
||
Other
|
|
45
|
|
|
59
|
|
||
Reserve for doubtful accounts
|
|
(16
|
)
|
|
(16
|
)
|
||
Total accounts receivable, net
|
|
$
|
245
|
|
|
$
|
262
|
|
|
|
|
|
NYMEX Contract Price Per Bbl
|
|
|
|||||||||||||||||||||
|
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|
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|
|
|
|
|
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Collars
|
|
Estimated Fair Value
Asset (Liability) |
|||||||||||||||
Period and Type of Instrument
|
|
Volume in MBbls
|
|
Swaps
(Weighted Average) |
|
Purchased Calls (Weighted Average)
(2)
|
|
Sold Puts
(Weighted Average) (1) |
|
Floors
(Weighted Average) |
|
Ceilings
(Weighted Average) |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|||||||||||||
2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fixed-price swaps
|
|
920
|
|
|
$
|
42.32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed-price swaps with sold puts:
|
|
7,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed-price swaps
|
|
|
|
89.98
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
339
|
|
|||||||
Sold puts
|
|
|
|
—
|
|
|
—
|
|
|
74.42
|
|
|
—
|
|
|
—
|
|
|
(231
|
)
|
|||||||
Collars with sold puts:
|
|
4,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Collars
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90.00
|
|
|
96.10
|
|
|
225
|
|
|||||||
Sold puts
|
|
|
|
—
|
|
|
—
|
|
|
75.00
|
|
|
—
|
|
|
—
|
|
|
(156
|
)
|
|||||||
Swaptions
(3)
|
|
—
|
|
|
42.67
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||||
Purchased calls
|
|
8,181
|
|
|
—
|
|
|
73.35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Fixed-price swaps
|
|
4,380
|
|
|
45.38
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Fixed-price swaps with sold puts:
|
|
4,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed-price swaps
|
|
|
|
88.37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
190
|
|
|||||||
Sold puts
|
|
|
|
—
|
|
|
—
|
|
|
73.28
|
|
|
—
|
|
|
—
|
|
|
(128
|
)
|
|||||||
Collars with sold puts:
|
|
2,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Collars
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90.00
|
|
|
95.59
|
|
|
93
|
|
|||||||
Sold puts
|
|
|
|
—
|
|
|
—
|
|
|
75.00
|
|
|
—
|
|
|
—
|
|
|
(64
|
)
|
|||||||
Purchased calls
|
|
6,548
|
|
|
—
|
|
|
73.81
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||
Total
|
|
$
|
262
|
|
(1)
|
For the volumes with sold puts, if the market prices remain below our sold puts at contract settlement, we will receive the market price plus the following:
|
•
|
the difference between our floors and our sold puts for collars with sold puts; or
|
•
|
the difference between our swaps and our sold puts for fixed-price swaps with sold puts.
|
(2)
|
We deferred the premiums related to the purchased calls until contract settlement. At
March 31, 2016
, the deferred premiums totaled
$21 million
.
|
|
|
|
|
NYMEX Contract Price Per MMBtu
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
Collars
|
|
Estimated Fair Value Asset (Liability)
|
|||||||||||||
Period and Type of Instrument
|
|
Volume in MMMBtus
|
|
Swaps (Weighted Average)
|
|
Sold Puts (Weighted Average)
|
|
Floors (Weighted Average)
|
|
Ceilings (Weighted Average)
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|||||||||||
2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Swaptions
(1)
|
|
—
|
|
|
$
|
2.28
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
Collars
|
|
8,250
|
|
|
—
|
|
|
—
|
|
|
4.00
|
|
|
4.54
|
|
|
15
|
|
|||||
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fixed-price swaps
|
|
27,375
|
|
|
2.73
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Collars
|
|
29,200
|
|
|
—
|
|
|
—
|
|
|
2.64
|
|
|
2.93
|
|
|
—
|
|
|||||
Total
|
|
$
|
6
|
|
(1)
|
During the first quarter of
2016
, we sold natural gas swaption contracts that, if exercised on their expiration date in June
2016
, would protect
36,800
MMMBtus of July through December 2016 production with
$2.28
per MMBtu fixed price swaps.
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||||||||||
|
|
Gross Fair Value
|
|
Offset in Balance Sheet
|
|
Balance Sheet Location
|
|
Gross Fair Value
|
|
Offset in Balance Sheet
|
|
Balance Sheet Location
|
||||||||||||||||||||
|
|
|
|
Current
|
|
Noncurrent
|
|
|
|
Current
|
|
Noncurrent
|
||||||||||||||||||||
|
|
(In millions)
|
|
(In millions)
|
||||||||||||||||||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Oil positions
|
|
$
|
803
|
|
|
$
|
(519
|
)
|
|
$
|
219
|
|
|
$
|
65
|
|
|
$
|
(541
|
)
|
|
$
|
519
|
|
|
$
|
(15
|
)
|
|
$
|
(7
|
)
|
Natural gas positions
|
|
15
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
||||||||
Total
|
|
$
|
818
|
|
|
$
|
(519
|
)
|
|
$
|
234
|
|
|
$
|
65
|
|
|
$
|
(550
|
)
|
|
$
|
519
|
|
|
$
|
(24
|
)
|
|
$
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Oil positions
|
|
$
|
1,005
|
|
|
$
|
(638
|
)
|
|
$
|
262
|
|
|
$
|
105
|
|
|
$
|
(660
|
)
|
|
$
|
638
|
|
|
$
|
(13
|
)
|
|
$
|
(9
|
)
|
Natural gas positions
|
|
22
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total
|
|
$
|
1,027
|
|
|
$
|
(638
|
)
|
|
$
|
284
|
|
|
$
|
105
|
|
|
$
|
(660
|
)
|
|
$
|
638
|
|
|
$
|
(13
|
)
|
|
$
|
(9
|
)
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2016
|
|
2015
|
||||
|
|
(In millions)
|
||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||
Realized gain (loss) on oil positions
|
|
$
|
71
|
|
|
$
|
96
|
|
Realized gain (loss) on natural gas positions
|
|
11
|
|
|
25
|
|
||
Total realized gain (loss)
|
|
82
|
|
|
121
|
|
||
Unrealized gain (loss) on oil positions
|
|
(83
|
)
|
|
37
|
|
||
Unrealized gain (loss) on natural gas positions
|
|
(16
|
)
|
|
(5
|
)
|
||
Total unrealized gain (loss)
|
|
(99
|
)
|
|
32
|
|
||
Total
|
|
$
|
(17
|
)
|
|
$
|
153
|
|
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
|
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). Level 3 instruments primarily include derivative instruments, such as commodity options (i.e., price collars, sold puts, purchased calls or swaptions) and other financial investments.
|
•
|
Our valuation models for derivative contracts are primarily industry-standard models (i.e., Black-Scholes) that consider various inputs including: (a) 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.
|
•
|
Our valuation model for the Stockholder Value Appreciation Program (SVAP) was a Monte Carlo simulation that was based on a probability model and considers various inputs including: (a) the measurement date stock price, (b) time value and (c) historical and implied volatility.
|
|
|
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, 2015:
|
|
|
|
|
|
|
|
|
||||||||
Money market fund investments
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Deferred compensation plan assets
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Equity securities available-for-sale
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Oil and gas derivative swap contracts
|
|
—
|
|
|
675
|
|
|
—
|
|
|
675
|
|
||||
Oil and gas derivative option contracts
|
|
—
|
|
|
—
|
|
|
(308
|
)
|
|
(308
|
)
|
||||
Stock-based compensation liability awards
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
||||
Total
|
|
$
|
3
|
|
|
$
|
675
|
|
|
$
|
(308
|
)
|
|
$
|
370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of March 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market fund investments
|
|
$
|
529
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
529
|
|
Deferred compensation plan assets
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Equity securities available-for-sale
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Oil and gas derivative swap contracts
|
|
—
|
|
|
530
|
|
|
—
|
|
|
530
|
|
||||
Oil and gas derivative option and swaption contracts
|
|
—
|
|
|
—
|
|
|
(262
|
)
|
|
(262
|
)
|
||||
Stock-based compensation liability awards
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||
Total
|
|
$
|
528
|
|
|
$
|
530
|
|
|
$
|
(262
|
)
|
|
$
|
796
|
|
|
|
Derivatives
|
|
Stock-Based Compensation
|
|
Total
|
||||||
|
|
|
||||||||||
Balance at January 1, 2015
|
|
$
|
(381
|
)
|
|
$
|
(3
|
)
|
|
$
|
(384
|
)
|
Realized or unrealized gains (losses) included in earnings
|
|
(21
|
)
|
|
(5
|
)
|
|
(26
|
)
|
|||
Purchases, issuances, sales and settlements:
|
|
|
|
|
|
|
|
|
|
|||
Settlements
|
|
70
|
|
|
—
|
|
|
70
|
|
|||
Transfers into Level 3
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transfers out of Level 3
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at March 31, 2015
|
|
$
|
(332
|
)
|
|
$
|
(8
|
)
|
|
$
|
(340
|
)
|
Change in unrealized gains or losses included in earnings relating to Level 3 instruments still held at March 31, 2015
|
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
|
$
|
(9
|
)
|
|
|
|
|
|
|
|
||||||
Balance at January 1, 2016
|
|
$
|
(308
|
)
|
|
$
|
—
|
|
|
$
|
(308
|
)
|
Realized or unrealized gains (losses) included in earnings
|
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
|||
Purchases, issuances, sales and settlements:
|
|
|
|
|
|
|
|
|
|
|||
Settlements
|
|
92
|
|
|
—
|
|
|
92
|
|
|||
Transfers into Level 3
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Transfers out of Level 3
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at March 31, 2016
|
|
$
|
(262
|
)
|
|
$
|
—
|
|
|
$
|
(262
|
)
|
Change in unrealized gains or losses included in earnings relating to Level 3 instruments still held at March 31, 2016
|
|
$
|
(32
|
)
|
|
$
|
—
|
|
|
$
|
(32
|
)
|
|
|
Estimated Fair Value Asset (Liability)
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
|||||||||||
Instrument Type
|
|
Valuation
Technique
|
|
Unobservable Input
|
|
Range
|
|||||||||
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
||||
Oil option contracts
|
|
$
|
(269
|
)
|
|
Black-Scholes
|
|
Oil price volatility
|
|
29.27
|
%
|
|
—
|
|
62.39%
|
|
|
|
|
|
|
Credit risk
|
|
0.02
|
%
|
|
—
|
|
2.06%
|
||
Natural gas option and swaption
contracts
|
|
$
|
7
|
|
|
Black-Scholes
|
|
Natural gas price volatility
|
|
25.51
|
%
|
|
—
|
|
70.20%
|
|
|
|
|
|
|
Credit risk
|
|
0.03
|
%
|
|
—
|
|
2.06%
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
|
(In millions)
|
||||||
5¾% Senior Notes due 2022
|
|
$
|
732
|
|
|
$
|
668
|
|
5⅝% Senior Notes due 2024
|
|
945
|
|
|
831
|
|
||
5⅜% Senior Notes due 2026
|
|
644
|
|
|
542
|
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
|
(In millions)
|
||||||
Proved
|
|
$
|
21,704
|
|
|
$
|
21,568
|
|
Unproved
|
|
900
|
|
|
780
|
|
||
Gross oil and gas properties
|
|
22,604
|
|
|
22,348
|
|
||
Accumulated depreciation, depletion and amortization
|
|
(9,214
|
)
|
|
(9,048
|
)
|
||
Accumulated impairment
|
|
(9,987
|
)
|
|
(9,481
|
)
|
||
Net oil and gas properties
|
|
$
|
3,403
|
|
|
$
|
3,819
|
|
|
|
Costs Incurred In
|
|
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
Total
|
||||||||||
|
|
(In millions)
|
|
|
||||||||||||||||
Acquisition costs
|
|
$
|
23
|
|
|
$
|
339
|
|
|
$
|
165
|
|
|
$
|
123
|
|
|
$
|
650
|
|
Exploration costs
|
|
125
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
159
|
|
|||||
Capitalized interest
|
|
9
|
|
|
33
|
|
|
49
|
|
|
—
|
|
|
91
|
|
|||||
Total costs withheld from amortization (unproved)
|
|
$
|
157
|
|
|
$
|
406
|
|
|
$
|
214
|
|
|
$
|
123
|
|
|
$
|
900
|
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
|
(In millions)
|
||||||
Furniture, fixtures and equipment
|
|
$
|
155
|
|
|
$
|
152
|
|
Gathering systems and equipment
|
|
115
|
|
|
115
|
|
||
Accumulated depreciation and amortization
|
|
(100
|
)
|
|
(95
|
)
|
||
Net other property and equipment
|
|
$
|
170
|
|
|
$
|
172
|
|
|
|
Three Months Ended
March 31, |
||||
|
|
2016
|
|
2015
|
||
U.S. statutory income tax rate
|
|
35.0
|
%
|
|
35.0
|
%
|
State and local income taxes, net of federal effect
|
|
0.8
|
|
|
2.2
|
|
Valuation allowance, domestic
|
|
(34.4
|
)
|
|
—
|
|
Valuation allowance, international
|
|
(3.0
|
)
|
|
—
|
|
Foreign tax on foreign earnings
|
|
2.3
|
|
|
(0.3
|
)
|
Other
|
|
(0.4
|
)
|
|
(0.1
|
)
|
Effective income tax rate
|
|
0.3
|
%
|
|
36.8
|
%
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
|
(In millions)
|
||||||
Revenue payable
|
|
$
|
141
|
|
|
$
|
164
|
|
Accrued capital costs
|
|
108
|
|
|
128
|
|
||
Accrued lease operating expenses
|
|
37
|
|
|
48
|
|
||
Employee incentive expense
|
|
17
|
|
|
53
|
|
||
Accrued interest on debt
|
|
31
|
|
|
66
|
|
||
Taxes payable
|
|
20
|
|
|
25
|
|
||
Other
|
|
44
|
|
|
49
|
|
||
Total accrued liabilities
|
|
$
|
398
|
|
|
$
|
533
|
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
|
(In millions)
|
||||||
Senior unsecured debt:
|
|
|
|
|
||||
Revolving credit facility — LIBOR based loans (matures in 2020)
|
|
$
|
—
|
|
|
$
|
—
|
|
Money market lines of credit
(1)
|
|
—
|
|
|
39
|
|
||
Total credit arrangements
|
|
—
|
|
|
39
|
|
||
5¾% Senior Notes due 2022
|
|
750
|
|
|
750
|
|
||
5⅝% Senior Notes due 2024
|
|
1,000
|
|
|
1,000
|
|
||
5⅜% Senior Notes due 2026
|
|
700
|
|
|
700
|
|
||
Total senior unsecured debt
|
|
2,450
|
|
|
2,489
|
|
||
Debt issuance costs
|
|
(21
|
)
|
|
(22
|
)
|
||
Total long-term debt
|
|
$
|
2,429
|
|
|
$
|
2,467
|
|
(1)
|
Because we have the ability and intent to use our available credit facility capacity 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 debt.
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2016
|
|
2015
|
||||
|
|
(In millions, except per share data)
|
||||||
Net income (loss)
|
|
$
|
(624
|
)
|
|
$
|
(480
|
)
|
|
|
|
|
|
||||
Weighted-average shares (denominator):
|
|
|
|
|
|
|
||
Weighted-average shares — basic
|
|
177
|
|
|
145
|
|
||
Dilution effect of stock options and unvested restricted stock awards and restricted stock units outstanding at end of period
(1)
|
|
—
|
|
|
—
|
|
||
Weighted-average shares — diluted
|
|
177
|
|
|
145
|
|
||
|
|
|
|
|
||||
Earnings (loss) per share:
|
|
|
|
|
|
|
||
Basic
|
|
$
|
(3.52
|
)
|
|
$
|
(3.30
|
)
|
Diluted
|
|
$
|
(3.52
|
)
|
|
$
|
(3.30
|
)
|
(1)
|
The effect of unvested restricted stock awards or restricted stock units and stock options has not been included in the calculation of shares outstanding for diluted EPS for the three months ended
March 31, 2016
and
2015
, as their effect would have been anti-dilutive. Had we recognized net income for the quarter, incremental shares attributable to the assumed vesting of unvested restricted stock awards and restricted stock units and the assumed exercise of outstanding stock options would have increased diluted weighted-average shares outstanding by
1.2 million
and
1.3 million
shares for the three months ended
March 31, 2016
and
2015
, respectively.
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2016
|
|
2015
|
||||
|
|
(In millions)
|
||||||
Equity awards
|
|
$
|
9
|
|
|
$
|
10
|
|
Liability awards:
|
|
|
|
|
||||
Cash-settled restricted stock units
|
|
3
|
|
|
7
|
|
||
Stockholder Value Appreciation Program
|
|
—
|
|
|
5
|
|
||
Total liability awards
|
|
3
|
|
|
12
|
|
||
Total stock-based compensation
|
|
12
|
|
|
22
|
|
||
Capitalized in oil and gas properties
|
|
(4
|
)
|
|
(7
|
)
|
||
Net stock-based compensation expense
|
|
$
|
8
|
|
|
$
|
15
|
|
|
|
Service-Based
Shares
|
|
Weighted- Average Grant Date Fair Value per Share
|
|
Performance/
Market-Based
Shares
|
|
Weighted- Average Grant Date Fair Value per Share
|
|
Total
Shares
|
|||||||
|
|
(In thousands, except per share data)
|
|||||||||||||||
Non-vested shares outstanding at January 1, 2016
|
|
1,700
|
|
|
$
|
30.30
|
|
|
1,074
|
|
|
$
|
23.76
|
|
|
2,774
|
|
Granted
(1)
|
|
308
|
|
|
23.97
|
|
|
436
|
|
|
28.94
|
|
|
744
|
|
||
Forfeited
|
|
(8
|
)
|
|
27.17
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||
Vested
|
|
(215
|
)
|
|
30.08
|
|
|
(5
|
)
|
|
56.49
|
|
|
(220
|
)
|
||
Non-vested shares outstanding at March 31, 2016
|
|
1,785
|
|
|
$
|
29.24
|
|
|
1,505
|
|
|
$
|
25.14
|
|
|
3,290
|
|
(1)
|
In February 2016, we granted approximately
436,000
shares of restricted stock units, which based on achievement of certain performance criteria, could vest within a range of
0%
to
200%
of shares granted.
|
|
|
Cash-Settled Restricted Stock Units
|
|
|
|
(In thousands)
|
|
Non-vested units outstanding at January 1, 2016
|
|
708
|
|
Granted
|
|
295
|
|
Forfeited
|
|
(14
|
)
|
Vested
|
|
(4
|
)
|
Non-vested units outstanding at March 31, 2016
|
|
985
|
|
15
.
|
Segment Information
|
|
|
Domestic
|
|
China
|
|
Total
|
||||||
|
|
(In millions)
|
||||||||||
Three Months Ended March 31, 2016:
|
|
|
|
|
|
|
||||||
Oil, gas and NGL revenues
|
|
$
|
235
|
|
|
$
|
49
|
|
|
$
|
284
|
|
Operating expenses:
|
|
|
|
|
|
|
||||||
Lease operating
|
|
47
|
|
|
14
|
|
|
61
|
|
|||
Transportation and processing
|
|
63
|
|
|
—
|
|
|
63
|
|
|||
Production and other taxes
|
|
10
|
|
|
—
|
|
|
10
|
|
|||
Depreciation, depletion and amortization
|
|
133
|
|
|
44
|
|
|
177
|
|
|||
General and administrative
|
|
43
|
|
|
1
|
|
|
44
|
|
|||
Ceiling test and other impairments
|
|
461
|
|
|
45
|
|
|
506
|
|
|||
Other
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Allocated income tax (benefit)
|
|
(194
|
)
|
|
(33
|
)
|
|
|
||||
Net income (loss) from oil and gas properties
|
|
$
|
(329
|
)
|
|
$
|
(22
|
)
|
|
|
||
Total operating expenses
|
|
|
|
|
|
862
|
|
|||||
Income (loss) from operations
|
|
|
|
|
|
(578
|
)
|
|||||
Interest expense, net of interest income, capitalized interest and other
|
|
|
|
|
|
(31
|
)
|
|||||
Commodity derivative income (expense)
|
|
|
|
|
|
(17
|
)
|
|||||
Income (loss) from operations before income taxes
|
|
|
|
|
|
$
|
(626
|
)
|
||||
Total assets
|
|
$
|
4,540
|
|
|
$
|
237
|
|
|
$
|
4,777
|
|
Additions to long-lived assets
|
|
$
|
261
|
|
|
$
|
—
|
|
|
$
|
261
|
|
|
|
Domestic
|
|
China
|
|
Total
|
||||||
|
|
(In millions)
|
||||||||||
Three Months Ended March 31, 2015:
|
|
|
|
|
|
|
||||||
Oil, gas and NGL revenues
|
|
$
|
303
|
|
|
$
|
46
|
|
|
$
|
349
|
|
Operating expenses:
|
|
|
|
|
|
|
||||||
Lease operating
|
|
65
|
|
|
10
|
|
|
75
|
|
|||
Transportation and processing
|
|
49
|
|
|
—
|
|
|
49
|
|
|||
Production and other taxes
|
|
13
|
|
|
—
|
|
|
13
|
|
|||
Depreciation, depletion and amortization
|
|
212
|
|
|
25
|
|
|
237
|
|
|||
General and administrative
|
|
61
|
|
|
2
|
|
|
63
|
|
|||
Ceiling test and other impairments
|
|
792
|
|
|
—
|
|
|
792
|
|
|||
Other
|
|
3
|
|
|
1
|
|
|
4
|
|
|||
Allocated income tax (benefit)
|
|
(330
|
)
|
|
5
|
|
|
|
|
|||
Net income (loss) from oil and gas properties
|
|
$
|
(562
|
)
|
|
$
|
3
|
|
|
|
||
Total operating expenses
|
|
|
|
|
|
1,233
|
|
|||||
Income (loss) from operations
|
|
|
|
|
|
(884
|
)
|
|||||
Interest expense, net of interest income, capitalized interest and other
|
|
|
|
|
|
(29
|
)
|
|||||
Commodity derivative income (expense)
|
|
|
|
|
|
153
|
|
|||||
Income (loss) from operations before income taxes
|
|
|
|
|
|
$
|
(760
|
)
|
||||
Total assets
|
|
$
|
8,978
|
|
|
$
|
673
|
|
|
$
|
9,651
|
|
Additions to long-lived assets
|
|
$
|
396
|
|
|
$
|
12
|
|
|
$
|
408
|
|
|
|
Three Months Ended
March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(In millions)
|
||||||
Non-cash investing and financing activities excluded from the statement of cash flows:
|
|
|
|
|
||||
(Increase) decrease in receivables for property sales
|
|
$
|
2
|
|
|
$
|
7
|
|
(Increase) decrease in accrued capital expenditures
|
|
20
|
|
|
109
|
|
||
(Increase) decrease in asset retirement costs
|
|
—
|
|
|
3
|
|
•
|
34.5
million additional shares of common stock issued through a public equity offering for net proceeds of approximately
$776
million, a portion of which was used to repay all outstanding borrowings under our credit facility and money market lines of credit. The remainder is being used for general corporate purposes including funding our 2016 capital budget, as needed;
|
•
|
total domestic production increased 1% from the fourth quarter of 2015 to
13.3
MMBOE. Compared to the first quarter of 2015, first quarter of 2016 domestic production increased
17%
;
|
•
|
production in the first quarter of 2016 in the Anadarko Basin of Oklahoma was 7.1 MMBOE, up 50% over the same period of 2015 and 4% over the fourth quarter of 2015. Anadarko Basin crude oil production increased more than 70% over the first quarter of 2015;
|
•
|
China production was up approximately 15% to 1.6 MMBbls over the fourth quarter of 2015 and approximately
81%
over the first quarter of 2015; and
|
•
|
trend of lower consolidated lease operating expense, both recurring and major expense, continued with a 9% decrease (11% on a per BOE basis) in the first quarter of 2016 compared to the fourth quarter of 2015. Compared to the first quarter of 2015, first quarter of 2016 consolidated lease operating expense decreased
33%
on a per BOE basis.
|
|
|
Three Months Ended
March 31, |
|
Percentage
Increase (Decrease)
|
|||||||
|
|
2016
|
|
2015
|
|
||||||
Production/Liftings:
|
|
|
|
|
|
|
|||||
Domestic:
(1)
|
|
|
|
|
|
|
|||||
Crude oil and condensate (MBbls)
|
|
5,335
|
|
|
4,950
|
|
|
8
|
%
|
||
Natural gas (Bcf)
|
|
32.9
|
|
|
27.3
|
|
|
20
|
%
|
||
NGLs (MBbls)
|
|
2,476
|
|
|
1,849
|
|
|
34
|
%
|
||
Total (MBOE)
|
|
13,288
|
|
|
11,355
|
|
|
17
|
%
|
||
China:
(2)
|
|
|
|
|
|
|
|||||
Crude oil and condensate (MBbls)
|
|
1,643
|
|
|
906
|
|
|
81
|
%
|
||
Total:
|
|
|
|
|
|
|
|||||
Crude oil and condensate (MBbls)
|
|
6,978
|
|
|
5,856
|
|
|
19
|
%
|
||
Natural gas (Bcf)
|
|
32.9
|
|
|
27.3
|
|
|
20
|
%
|
||
NGLs (MBbls)
|
|
2,476
|
|
|
1,849
|
|
|
34
|
%
|
||
Total (MBOE)
|
|
14,931
|
|
|
12,261
|
|
|
22
|
%
|
||
Average Realized Prices:
|
|
|
|
|
|
|
|
|
|
||
Domestic:
(3)
|
|
|
|
|
|
|
|||||
Crude oil and condensate (per Bbl)
|
|
$
|
25.72
|
|
|
$
|
38.21
|
|
|
(33
|
)%
|
Natural gas (per Mcf)
|
|
1.83
|
|
|
2.70
|
|
|
(32
|
)%
|
||
NGLs (per Bbl)
|
|
14.75
|
|
|
19.96
|
|
|
(26
|
)%
|
||
Crude oil equivalent (per BOE)
|
|
17.70
|
|
|
26.64
|
|
|
(34
|
)%
|
||
China:
|
|
|
|
|
|
|
|||||
Crude oil and condensate (per Bbl)
|
|
$
|
29.89
|
|
|
$
|
50.78
|
|
|
(41
|
)%
|
Total:
|
|
|
|
|
|
|
|||||
Crude oil and condensate (per Bbl)
|
|
$
|
26.70
|
|
|
$
|
40.15
|
|
|
(33
|
)%
|
Natural gas (per Mcf)
|
|
1.83
|
|
|
2.70
|
|
|
(32
|
)%
|
||
NGLs (per Bbl)
|
|
14.75
|
|
|
19.96
|
|
|
(26
|
)%
|
||
Crude oil equivalent (per BOE)
|
|
19.04
|
|
|
28.43
|
|
|
(33
|
)%
|
(1)
|
Excludes natural gas produced and consumed in operations of
1.5
Bcf and
2.2
Bcf during the
three months ended March 31, 2016
and
2015
, respectively.
|
(2)
|
Represents our net share of volumes sold regardless of when produced.
|
(3)
|
Had we included the realized effects of derivative contracts, the average realized prices for our domestic crude oil and natural gas production would have been as follows:
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2016
|
|
2015
|
||||
Crude oil and condensate (per Bbl)
|
|
$
|
38.96
|
|
|
$
|
57.51
|
|
Natural gas (per Mcf)
|
|
2.18
|
|
|
3.62
|
|
|
|
Unit-of-Production
|
|
Total Amount
|
||||||||||||||||||
|
|
Three Months Ended
March 31, |
|
Percentage
Increase (Decrease)
|
|
Three Months Ended
March 31, |
|
Percentage
Increase (Decrease)
|
||||||||||||||
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
||||||||||||
|
|
(Per BOE)
|
|
|
|
(In millions)
|
|
|
||||||||||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease operating
|
|
$
|
3.51
|
|
|
$
|
5.76
|
|
|
(39
|
)%
|
|
$
|
47
|
|
|
$
|
65
|
|
|
(29
|
)%
|
Transportation and processing
|
|
4.77
|
|
|
4.33
|
|
|
10
|
%
|
|
63
|
|
|
49
|
|
|
29
|
%
|
||||
Production and other taxes
|
|
0.71
|
|
|
1.18
|
|
|
(40
|
)%
|
|
10
|
|
|
13
|
|
|
(29
|
)%
|
||||
Depreciation, depletion and amortization
|
|
10.06
|
|
|
18.62
|
|
|
(46
|
)%
|
|
133
|
|
|
212
|
|
|
(37
|
)%
|
||||
General and administrative
|
|
3.20
|
|
|
5.31
|
|
|
(40
|
)%
|
|
43
|
|
|
61
|
|
|
(29
|
)%
|
||||
Ceiling test and other impairments
|
|
34.68
|
|
|
69.78
|
|
|
(50
|
)%
|
|
461
|
|
|
792
|
|
|
(42
|
)%
|
||||
Other
|
|
0.05
|
|
|
0.23
|
|
|
(78
|
)%
|
|
1
|
|
|
3
|
|
|
(73
|
)%
|
||||
Total operating expenses
|
|
56.98
|
|
|
105.21
|
|
|
(46
|
)%
|
|
758
|
|
|
1,195
|
|
|
(37
|
)%
|
||||
China:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease operating
|
|
$
|
8.93
|
|
|
$
|
10.37
|
|
|
(14
|
)%
|
|
$
|
14
|
|
|
$
|
10
|
|
|
53
|
%
|
Depreciation, depletion and amortization
|
|
26.75
|
|
|
27.93
|
|
|
(4
|
)%
|
|
44
|
|
|
25
|
|
|
74
|
%
|
||||
General and administrative
|
|
0.85
|
|
|
2.64
|
|
|
(68
|
)%
|
|
1
|
|
|
2
|
|
|
(42
|
)%
|
||||
Ceiling test impairment
|
|
27.52
|
|
|
—
|
|
|
100
|
%
|
|
45
|
|
|
—
|
|
|
100
|
%
|
||||
Other
|
|
—
|
|
|
1.31
|
|
|
(100
|
)%
|
|
—
|
|
|
1
|
|
|
(100
|
)%
|
||||
Total operating expenses
|
|
64.05
|
|
|
42.25
|
|
|
52
|
%
|
|
104
|
|
|
38
|
|
|
>100 %
|
|
||||
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease operating
|
|
$
|
4.08
|
|
|
$
|
6.09
|
|
|
(33
|
)%
|
|
$
|
61
|
|
|
$
|
75
|
|
|
(18
|
)%
|
Transportation and processing
|
|
4.25
|
|
|
4.01
|
|
|
6
|
%
|
|
63
|
|
|
49
|
|
|
29
|
%
|
||||
Production and other taxes
|
|
0.65
|
|
|
1.10
|
|
|
(41
|
)%
|
|
10
|
|
|
13
|
|
|
(29
|
)%
|
||||
Depreciation, depletion and amortization
|
|
11.89
|
|
|
19.31
|
|
|
(38
|
)%
|
|
177
|
|
|
237
|
|
|
(25
|
)%
|
||||
General and administrative
|
|
2.94
|
|
|
5.11
|
|
|
(42
|
)%
|
|
44
|
|
|
63
|
|
|
(30
|
)%
|
||||
Ceiling test and other impairments
|
|
33.89
|
|
|
64.62
|
|
|
(48
|
)%
|
|
506
|
|
|
792
|
|
|
(36
|
)%
|
||||
Other
|
|
0.06
|
|
|
0.31
|
|
|
(81
|
)%
|
|
1
|
|
|
4
|
|
|
(77
|
)%
|
||||
Total operating expenses
|
|
57.76
|
|
|
100.55
|
|
|
(43
|
)%
|
|
862
|
|
|
1,233
|
|
|
(30
|
)%
|
•
|
Lease operating expense decreased 39% on a per BOE basis primarily due to lower service costs combined with higher production volumes. Service costs per BOE declined primarily in our Anadarko, Williston and Uinta basins due to our increased focus on cost-reduction initiatives combined with downward service cost pressures in the industry due to a lower commodity price environment.
|
•
|
Transportation and processing expense per BOE increased 10% primarily due to increased gas processing fees in the Williston Basin. Additionally, oil transportation costs increased in the Williston Basin due to utilization of pipelines initiated in the second half of
2015
. These pipeline costs allow for improved realized oil prices.
|
•
|
Production and other taxes decreased 40% per BOE consistent with lower revenue totals. As a percent of total revenue, production and other taxes were 4.0% and 4.4% for the three months ended
March 31, 2016
and
2015
, respectively. Our
2016
rate is lower as our development has been focused in areas with lower taxes due to horizontal well credits.
|
•
|
Depreciation, depletion and amortization (DD&A) decreased 46% on a per BOE basis primarily due to the impact of non-cash ceiling test impairments during
2015
. We expect a further decrease in the second quarter of 2016 as a result of the impairment recorded in the
first quarter
of
2016
.
|
•
|
General and administrative (G&A) expenses decreased 29% during the
first quarter
of
2016
compared to the
first quarter
of
2015
. We have lower employee-related expenses of $17 million due to a reduction of headcount and lower severance costs as compared to the prior year. In addition, lower gross stock-based compensation expense resulted in $10 million in lower G&A expenses. For the three months ended
March 31, 2016
, we capitalized $17 million ($1.29 per BOE) of direct internal costs as compared to $25 million ($2.19 per BOE) during the comparable quarter of
2015
. This decrease in capitalization is consistent with the reduced exploration and development activities in the Uinta, Williston and Maverick basins during the
first quarter
of
2016
.
|
•
|
At
March 31, 2016
, we recorded a ceiling test impairment of
$461 million
due to a net decrease in the discounted value of our proved reserves. The primary reason for the change in value was an
8%
decrease in crude oil SEC pricing and a 7% decrease in natural gas SEC pricing since December 31, 2015. These commodity price decreases are partially offset by the
impact of current service cost reductions in reserve estimates. At March 31, 2015, we recorded a ceiling test impairment of $788 million due to a net decrease in the discounted value of our proved reserves. The primary reason for the change in value was a 13% decrease in crude oil SEC pricing partially offset by the impact of current service cost reductions in reserve estimates. During the
first quarter
of
2015
, we recorded a $4 million rig impairment associated with our decision to indefinitely lay down both company-owned drilling rigs in the Uinta Basin.
|
•
|
On a per BOE basis, lease operating expense was 14% lower primarily due to higher production volumes.
|
•
|
DD&A increased by
74%
primarily due to an
81%
increase in lifting volumes, partially offset by the impact of non-cash ceiling test impairments during 2015.
|
•
|
At
March 31, 2016
, we recorded a non-cash ceiling test impairment of
$45 million
due to a net decrease in the discounted value of our proved reserves. The primary reason for the change in value was an
8%
decrease in crude oil SEC pricing since December 31, 2015.
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2016
|
|
2015
|
||||
|
(In millions)
|
|||||||
Gross interest expense:
|
|
|
|
|
||||
Credit arrangements
|
|
$
|
6
|
|
|
$
|
4
|
|
Senior notes
|
|
35
|
|
|
28
|
|
||
Senior subordinated notes
|
|
—
|
|
|
12
|
|
||
Total gross interest expense
|
|
41
|
|
|
44
|
|
||
Capitalized interest
|
|
(9
|
)
|
|
(7
|
)
|
||
Net interest expense
|
|
$
|
32
|
|
|
$
|
37
|
|
|
Positions Settled in the Three Months Ended March 31, 2016
|
|
Positions Settling After March 31, 2016
|
|
Total
|
||||||
|
(In millions)
|
||||||||||
Net derivative asset at December 31, 2015
|
$
|
82
|
|
|
$
|
285
|
|
|
$
|
367
|
|
Settled positions
(1)
|
(82
|
)
|
|
—
|
|
|
(82
|
)
|
|||
Change in fair value of remaining positions and fair value of new positions
|
—
|
|
|
(17
|
)
|
|
(17
|
)
|
|||
Total unrealized gain (loss)
|
(82
|
)
|
|
(17
|
)
|
|
(99
|
)
|
|||
Net derivative asset (liability) at March 31, 2016
|
$
|
—
|
|
|
$
|
268
|
|
|
$
|
268
|
|
(1)
|
Represents the fair value of positions included in the net derivative asset as of December 31, 2015 that have settled during 2016. Actual settlement amounts differ due to the changes in the fair value of the positions between the balance sheet date and the settlement date and are reflected in the realized gain (loss) noted in Note
4
, "
Derivative Financial Instruments
".
|
|
|
Domestic
|
|
China
|
|
Total
|
||||||
|
|
|
|
(In millions)
|
|
|
||||||
Total income (loss) before income taxes
|
|
$
|
(570
|
)
|
|
$
|
(56
|
)
|
|
$
|
(626
|
)
|
U.S. federal statutory tax rate
|
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
|||
Tax expense (benefit) at statutory tax rate
|
|
(200
|
)
|
|
(19
|
)
|
|
(219
|
)
|
|||
State and local income taxes, net of tax effect
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||
Change in valuation allowances
|
|
216
|
|
|
18
|
|
|
234
|
|
|||
Foreign tax on foreign earnings
|
|
—
|
|
|
(14
|
)
|
|
(14
|
)
|
|||
Other
|
|
2
|
|
|
—
|
|
|
2
|
|
|||
Total provision (benefit) for income taxes
|
|
$
|
13
|
|
|
$
|
(15
|
)
|
|
$
|
(2
|
)
|
Effective tax rate
|
|
(2
|
)%
|
|
27
|
%
|
|
0.3
|
%
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(In millions)
|
||||||
Exploration and development (exclusive of leasehold)
|
$
|
221
|
|
|
$
|
346
|
|
Acquisitions
|
1
|
|
|
—
|
|
||
Leasing proved and unproved property (leasehold)
|
11
|
|
|
29
|
|
||
Pipeline spending
|
—
|
|
|
2
|
|
||
Total
|
$
|
233
|
|
|
$
|
377
|
|
|
|
|
|
NYMEX Contract Price Per Bbl
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Collars
|
|||||||||||||
Period and Type of Instrument
|
|
Volume in MBbls
|
|
Swaps
(Weighted Average) |
|
Purchased Calls (Weighted Average)
|
|
Sold Puts
(Weighted Average) |
|
Floors
(Weighted Average) |
|
Ceilings
(Weighted Average) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fixed-price swaps
|
|
3,553
|
|
|
$
|
41.73
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed-price swaps with sold puts:
|
|
7,057
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-price swaps
|
|
|
|
89.98
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Sold puts
|
|
|
|
—
|
|
|
—
|
|
|
74.42
|
|
|
—
|
|
|
—
|
|
||||||
Collars with sold puts:
|
|
4,673
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Collars
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90.00
|
|
|
96.10
|
|
||||||
Sold puts
|
|
|
|
—
|
|
|
—
|
|
|
75.00
|
|
|
—
|
|
|
—
|
|
||||||
Swaptions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchased calls
|
|
8,181
|
|
|
—
|
|
|
73.35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed-price swaps
|
|
6,205
|
|
|
45.43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Fixed-price swaps with sold puts:
|
|
4,468
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed-price swaps
|
|
|
|
88.37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Sold puts
|
|
|
|
—
|
|
|
—
|
|
|
73.28
|
|
|
—
|
|
|
—
|
|
||||||
Collars with sold puts:
|
|
2,080
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Collars
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90.00
|
|
|
95.59
|
|
||||||
Sold puts
|
|
|
|
—
|
|
|
—
|
|
|
75.00
|
|
|
—
|
|
|
—
|
|
||||||
Purchased calls
|
|
6,548
|
|
|
—
|
|
|
73.81
|
|
|
—
|
|
|
—
|
|
|
—
|
|
•
|
the availability and volatility of the securities, capital or credit markets and the cost of capital;
|
•
|
maintaining sufficient liquidity to fund our operations and business strategies;
|
•
|
the accuracy of and fluctuations in our reserves estimates due to sustained low commodity prices, incorrect assumptions and other causes;
|
•
|
the impact of, and changes in, legislation, law and governmental regulations, including those related to hydraulic fracturing, climate change, seismicity and over-the-counter derivatives;
|
•
|
land, legal, regulatory, and ownership complexities inherent in the U.S. oil and gas industry;
|
•
|
the impact of regulatory approvals;
|
•
|
the ability and willingness of current or potential lenders, derivative 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 prices and quantities of commodities reflected in our commodity derivative arrangements as compared to the actual prices or quantities of commodities we produce or use;
|
•
|
the volatility, instrument terms and liquidity in the commodity futures and commodity and financial derivatives markets;
|
•
|
drilling risks and results;
|
•
|
our ability to monetize non-strategic assets, repay or refinance our existing indebtedness and the impact of changes in our investment ratings;
|
•
|
the other factors affecting our business described under the caption “
Risk Factors
” and “
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates
” included in our
2015
Annual Report on Form 10-K.
|
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, 2016
|
|
4,771
|
|
|
$
|
30.05
|
|
|
—
|
|
—
|
February 1 — February 29, 2016
|
|
66,207
|
|
|
28.14
|
|
|
—
|
|
—
|
|
March 1 — March 31, 2016
|
|
2,070
|
|
|
27.67
|
|
|
—
|
|
—
|
|
Total
|
|
73,048
|
|
|
$
|
28.25
|
|
|
—
|
|
—
|
(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
|
|
Fourth Amended and Restated Certificate of Incorporation of Newfield Exploration Company dated July 22, 2015 (incorporated by reference to Exhibit 3.1 to Newfield’s Current Report on Form 8-K filed with the SEC on July 27, 2015 (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 July 25, 2013 (File No. 1-12534))
|
|
|
|
†*10.1
|
|
Form of 2016 Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
|
|
|
|
†*10.2
|
|
Form of 2016 Executive Officer TSR Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
|
|
|
|
†*10.3
|
|
Form of 2016 Cash-Settled Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
|
|
|
|
†*10.4
|
|
Newfield Exploration Company Amended and Restated 2011 Annual Incentive Compensation Plan
|
|
|
|
*10.5
|
|
Fifth Amendment to Credit Agreement, dated as of March 18, 2016, by and among Newfield and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders, Wells Fargo Bank, National Association, as Syndication Agent for the Lenders and the Lenders party thereto
|
|
|
|
†10.6
|
|
Amended and Restated Change of Control Severance Agreement, by and between the Company and Lawrence S. Massaro, effective as of February 10, 2016 (incorporated by reference to Exhibit 10.1 to Newfield's Current Report on Form 8-K filed with the SEC on February 12, 2016 (File No. 1-12534))
|
|
|
|
*31.1
|
|
Certification of Chief Executive Officer of Newfield Exploration Company 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 Exploration Company 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 Exploration Company 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 Exploration Company 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.
|
†
|
Identifies management contracts and compensatory plans or arrangements.
|
|
NEWFIELD EXPLORATION COMPANY
|
|
|
|
|
Date: May 3, 2016
|
By:
|
/s/ LAWRENCE S. MASSARO
|
|
|
Lawrence S. Massaro
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Exhibit Number
|
|
Description
|
3.1
|
|
Fourth Amended and Restated Certificate of Incorporation of Newfield Exploration Company dated July 22, 2015 (incorporated by reference to Exhibit 3.1 to Newfield’s Current Report on Form 8-K filed with the SEC on July 27, 2015 (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 July 25, 2013 (File No. 1-12534))
|
|
|
|
†*10.1
|
|
Form of 2016 Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
|
|
|
|
†*10.2
|
|
Form of 2016 Executive Officer TSR Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
|
|
|
|
†*10.3
|
|
Form of 2016 Cash-Settled Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
|
|
|
|
†*10.4
|
|
Newfield Exploration Company Amended and Restated 2011 Annual Incentive Compensation Plan
|
|
|
|
*10.5
|
|
Fifth Amendment to Credit Agreement, dated as of March 18, 2016, by and among Newfield and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders, Wells Fargo Bank, National Association, as Syndication Agent for the Lenders and the Lenders party thereto
|
|
|
|
†10.6
|
|
Amended and Restated Change of Control Severance Agreement, by and between the Company and Lawrence S. Massaro, effective as of February 10, 2016 (incorporated by reference to Exhibit 10.1 to Newfield's Current Report on Form 8-K filed with the SEC on February 12, 2016 (File No. 1-12534))
|
|
|
|
*31.1
|
|
Certification of Chief Executive Officer of Newfield Exploration Company 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 Exploration Company 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 Exploration Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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*32.2
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Certification of Chief Financial Officer of Newfield Exploration Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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*101.INS
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XBRL Instance Document
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*101.SCH
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|
XBRL Schema Document
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*101.CAL
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XBRL Calculation Linkbase Document
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*101.LAB
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XBRL Label Linkbase Document
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*101.PRE
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XBRL Presentation Linkbase Document
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*101.DEF
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XBRL Definition Linkbase Document
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*
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Filed or furnished herewith.
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†
|
Identifies management contracts and compensatory plans or arrangements.
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|
Awardee
|
|
Date of Award:
|
February 10, 2016
|
|
Vesting Dates:
|
|
|
|
First Vesting Date:
|
August 15, 2016
|
|
Second Vesting Date:
|
August 15, 2017
|
|
Third Vesting Date:
|
August 15, 2018
|
|
Fourth Vesting Date:
|
February 15, 2019
|
Number of Restricted Stock Units:
|
________________
|
(a)
|
on the First Vesting Date, the Forfeiture Restrictions shall lapse as to one-fourth of the RSUs subject to this Notice; and
|
(b)
|
on each succeeding Vesting Date, the Forfeiture Restrictions shall lapse as to an additional one-fourth of the RSUs subject to this Notice, so that on the Fourth Vesting Date the Forfeiture Restrictions shall have lapsed as to all of the RSUs subject to this Notice.
|
1.
|
TERMINATION OF EMPLOYMENT/CHANGE OF CONTROL.
The following provisions will apply in the event your employment with the Company Group terminates, or a Change of Control of the Company occurs, in each case, prior to the Fourth Vesting Date specified in the Notice of Restricted Stock Unit Award (the “
Notice
”) to which these Terms and Conditions are attached (the “
Terms and Conditions
”):
|
2.
|
PAYMENT IN SETTLEMENT OF VESTED RSUS
. Payment in respect of vested RSUs shall be made as soon as practicable, but no later than 60 days following, as applicable (a) the Vesting Dates specified in the Notice on which the Forfeiture Restrictions applicable to the RSUs lapse; (b) the date the Change of Control of the Company is consummated if the
|
3.
|
PROHIBITED ACTIVITY
. Notwithstanding any other provision of these Terms and Conditions or the Notice, 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.
|
4.
|
TAX WITHHOLDING
. Unless otherwise specifically provided otherwise in the future by an action of the Committee (which action may not be delegated to management), the Committee hereby authorizes and specifically directs the Company to reduce the number of shares of Common Stock deliverable upon the lapse of the Forfeiture Restrictions applicable to the RSUs by the minimum number of shares of Common Stock necessary to satisfy the Company’s Minimum Statutory Withholding Obligation in accordance with the Plan;
provided
, that where the Fair Market Value of the shares of Common Stock does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company shall withhold shares of Common Stock with a Fair Market Value slightly less than the amount of the Minimum Statutory Tax Withholding Obligation and you must satisfy the remaining Minimum Statutory Withholding Obligation through the payment of cash or check or withholding of cash amounts due in the appropriate amount and in compliance with the terms of the Plan, the Notice, and these Terms and Conditions.
|
5.
|
NONTRANSFERABILITY.
Neither the RSUs, the Notice nor the Terms and Conditions is transferable by you otherwise than by will or by the laws of descent and distribution.
|
6.
|
CAPITAL ADJUSTMENTS AND REORGANIZATIONS.
The existence of the RSUs 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 Notice 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.
|
7.
|
RSUs 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 RSUs that are awarded hereby. Only after a share of the Common Stock is issued in exchange for a RSU will you have all of the rights of a stockholder with respect to such share of Common Stock issued in exchange for a RSU.
|
8.
|
NO ADVICE REGARDING RSUs.
You acknowledge and agree that (a) you are not relying upon any written or oral statement or representation of the Company Group, or any of its respective employees, directors, officers, attorneys or agents (collectively, the “
Company Parties
”) regarding the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the RSUs, and (b) in deciding to accept the RSUs, you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted. You hereby release, acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any nature whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the RSUs.
|
9.
|
EMPLOYMENT RELATIONSHIP.
For purposes of the Notice and these Terms and Conditions, you shall be considered to be in the employment of the Company Group as long as you have an employment relationship with a member of 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. The Committee may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company or the Company Group, provided that rights to the RSUs during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began. Records of the Company or of the Company Group regarding your period of service, termination of service and the reason(s) therefor, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.
|
10.
|
FURNISH INFORMATION
. You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.
|
11.
|
NOT AN EMPLOYMENT AGREEMENT
. The Notice and the Terms and Conditions are not an employment agreement, and no provision of the Notice or these Terms and Conditions 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.
|
12.
|
SECURITIES ACT LEGEND.
If you are an officer or affiliate of the Company under the Securities Act of 1933, as amended (the “
Securities Act
”), you consent to the placing on any certificate for the shares of the Common Stock issued under the Notice an appropriate legend restricting resale or other transfer of such shares except in accordance with the Securities Act and all applicable rules thereunder.
|
13.
|
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. No member of the Company Group and no member of the Board of Directors shall be liable for any act, omission or determination taken or made in good faith with respect to the Notice, the Terms and Conditions or the RSUs granted thereunder.
|
14.
|
EXECUTION OF RECEIPTS AND RELEASES
. Any payment of cash or any issuance or transfer of shares of Common Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance to execute a release and receipt therefor in such form as it shall determine.
|
15.
|
FUNDING.
You shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments that the Company may make to aid it in meeting its obligations under the Notice and the Terms and Conditions. Your right to receive payments under the Notice and the Terms and Conditions shall be no greater than the rights of an unsecured general creditor of the Company.
|
16.
|
NO GUARANTEE OF INTERESTS
. The Board of Directors and the Company do not guarantee the Common Stock of the Company from loss or depreciation.
|
17.
|
INFORMATION CONFIDENTIAL
. As partial consideration for the granting of the award under the Notice and the Terms and Conditions, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to these Terms and Conditions or the Notice; provided, however, that such information may be disclosed as required by law and may be given in
|
18.
|
SUCCESSORS
. These Terms and Conditions and the Notice shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.
|
19.
|
SEVERABILITY
. If any provision of these Terms and Conditions or the Notice is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and these Terms and Conditions and the Notice shall be construed and enforced as if the illegal or invalid provision had never been included.
|
20.
|
HEADINGS
. The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.
|
21.
|
GOVERNING LAW
. All questions arising with respect to the provisions of these Terms and Conditions and the Notice shall be determined by application of the laws of Delaware, without giving any effect to any conflict of law provisions thereof, except to the extent Delaware state law is preempted by federal law. The obligation of the Company to sell and deliver Common Stock is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Common Stock.
|
22.
|
CONSENT TO TEXAS JURISDICTION AND VENUE
. You hereby consent and agree that state courts located in Montgomery County, Texas and the United States District Court for the Southern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the RSUs, these Terms and Conditions, or the Notice. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to such jurisdiction as an inconvenient forum.
|
23.
|
AMENDMENT
. These Terms and Conditions and the Notice may be amended by the Committee at any time;
provided
, that no such amendment shall adversely affect the RSUs in any material way, without your written consent.
|
24.
|
MISCELLANEOUS
. The Notice is awarded pursuant to and is subject to all of the terms and conditions of the Plan (including any amendments thereto) and these Terms and Conditions. In the event of a conflict between these Terms and Conditions, the Plan and the Notice, the Plan provisions will control. The term “
you
” and “
your
” refer to the Awardee named in the Notice. Capitalized terms that are not defined herein shall have the meanings ascribed to such terms in the Plan or the Notice.
|
|
Awardee
|
Date of Award:
|
February 10, 2016
|
Target Number of Restricted Stock Units:
|
_______________
|
1.
|
CONTINUOUS EMPLOYMENT REQUIREMENT.
If, prior to the last day of the Performance Period, your employment with the Company and all direct and indirect wholly owned subsidiaries (collectively, the “
Company Group
”) is terminated for any reason other than your death, Disability or Qualified Retirement, you shall, for no consideration, forfeit to the Company all TSR Restricted Stock Units to the extent then subject to Forfeiture Restrictions (the “
Continuous Employment Requirement
”). For the avoidance of doubt, if before the end of the Performance Period you incur a Separation From Service due to your death, Disability or Qualified Retirement, then you shall be deemed to have satisfied the Continuous Employment Requirement and to have earned the number of Earned Restricted Stock Units that you would have actually earned had you remained employed through the end of the Performance Period determined in accordance with Section 2 as of the end of the Performance Period.
|
2.
|
TSR VESTING OBJECTIVE.
If the Continuous Employment Requirement is satisfied, the Forfeiture Restrictions applicable to the award evidenced by the Notice of Restricted Stock Unit Award Total Stockholder Return (TSR) (the “
Notice
”) to which these Terms and Conditions are attached (the “
Terms and Conditions
”), shall lapse and you shall be entitled to receive Common Stock in respect of Earned Restricted Stock Units upon the Committee’s certification of its determination of the Company’s TSR Rank in respect of the Performance Period with regard to Total Stockholder Return as compared to the Total Stockholder Return of the Peer Companies as outlined in these Terms and Conditions (the “
TSR Vesting Objective
”). The Committee shall have the sole discretion for determining the level of achievement with respect to the TSR Vesting Objective and the resulting number of Earned Restricted Stock Units, and any such determinations shall be conclusive.
|
3.
|
DEFINITIONS.
For purposes of these Terms and Conditions, the following terms shall have the indicated meanings:
|
|
TSR Rank
|
Percentage of Target Restricted Stock Units that Become Earned Restricted Stock Units
|
First Quartile
|
1-3
|
200%
|
4
|
180%
|
|
5
|
160%
|
|
Second Quartile
|
6
|
140%
|
7
|
130%
|
|
8
|
120%
|
|
9
|
110%
|
|
10
|
100%
|
|
Third Quartile
|
11
|
90%
|
12
|
80%
|
|
13
|
70%
|
|
14
|
60%
|
|
15
|
50%
|
|
Fourth Quartile
|
16-20
|
0%
|
4.
|
CHANGE OF CONTROL
. The impact of a Change of Control of the Company on the TSR Restricted Stock Units shall be determined under the provisions of this Section 4 rather than under any provisions of the Plan dealing with vesting or the lapse of forfeiture restrictions. If a Change of Control of the Company occurs before the end of the Performance Period and you do not terminate employment with the Company Group before the date the Change of Control of the Company is consummated, then if the Change of Control of the Company qualifies as a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, within the meaning of Section 409A, upon the consummation of such Change of Control, you shall be deemed to have earned a number TSR Restricted Stock Units equal to the number of Earned Restricted Stock Units you would have earned in accordance with Section 2, but assuming that (a) the Performance Period ended on the date the Change of Control of the Company is consummated, (b) the determination of whether, and to what extent, the TSR Vesting Objective is achieved shall be based on actual performance through the date the Change of Control of the Company is consummated, and (c) the Closing Value for the Company and each Peer Company (including the EPX Index, if applicable) is equal to the average closing price of the Common Stock or the primary common equity security of each Peer Company, as applicable, for all trading days during the 30-day period ending on the date the Change of Control of the Company is consummated, instead of calculating the Closing Value as of December 31, 2018.
|
5.
|
PAYMENT IN SETTLEMENT OF EARNED RSUS
. The Committee shall determine and certify of the level of achievement of the TSR Vesting Objective as soon as administratively practicable following the end of the Performance Period (or shortened Performance Period, in the event of a Change of Control). If you have satisfied the Continuous Employment Requirement, payment in respect of Earned Restricted Stock Units shall be made to you as soon as practicable, but no later than 60 days following, as applicable (a) the last day of the Performance Period (including in the case of your Separation From Service due to your death, Disability or Qualified Retirement); or (b) the date the Change of Control of the Company is consummated if the Change of Control of the Company qualifies as a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, within the meaning of Section 409A, in the case of vesting under Section 4. As provided in the Notice, payment in settlement of Earned Restricted Stock Units shall be made in the form of one share of Common Stock in exchange for each Earned Restricted Stock Unit, subject to satisfaction of applicable withholding and other taxes as provided in Section 7.
|
6.
|
PROHIBITED ACTIVITY
. Notwithstanding any other provision of these Terms and Conditions or the Notice, 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.
|
7.
|
TAX WITHHOLDING
. Unless otherwise specifically provided otherwise in the future by an action of the Committee (which action may not be delegated to management), the Committee hereby authorizes and specifically directs the Company to reduce the number of shares of Common Stock deliverable upon the lapse of the Forfeiture Restrictions applicable to the TSR Restricted Stock Units that become Earned Restricted Stock Units by the minimum number of shares of Common Stock necessary to satisfy the Company’s Minimum Statutory Withholding Obligation in accordance with the Plan;
provided
, that where the Fair Market Value of the shares of Common Stock does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company shall withhold shares of Common Stock with a Fair Market Value slightly less than the amount of the Minimum Statutory Tax Withholding Obligation and you must satisfy the remaining Minimum Statutory Withholding Obligation through the payment of cash or check or withholding of cash amounts due in the appropriate amount and in compliance with the terms of the Plan, the Notice, and these Terms and Conditions.
|
8.
|
NONTRANSFERABILITY.
Neither the TSR Restricted Stock Units, the Notice nor the Terms and Conditions is transferable by you otherwise than by will or by the laws of descent and distribution.
|
9.
|
CAPITAL ADJUSTMENTS AND REORGANIZATIONS.
The existence of the TSR 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 Notice 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.
|
10.
|
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 TSR Restricted Stock
|
11.
|
NO ADVICE REGARDING RESTRICTED STOCK UNIT AWARD.
You acknowledge and agree that (a) you are not relying upon any written or oral statement or representation of the Company Group, or any of its respective employees, directors, officers, attorneys or agents (collectively, the “
Company Parties
”) regarding the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the TSR Restricted Stock Units, and (b) in deciding to accept the TSR Restricted Stock Units, you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted. You hereby release, acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any nature whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the TSR Restricted Stock Units.
|
12.
|
EMPLOYMENT RELATIONSHIP.
For purposes of the Notice and these Terms and Conditions, you shall be considered to be in the employment of the Company Group as long as you have an employment relationship with a member of 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. The Committee may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company or the Company Group, provided that rights to the TSR Restricted Stock Units during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began. Records of the Company or of the Company Group regarding your period of service, termination of service and the reason(s) therefor, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.
|
13.
|
FURNISH INFORMATION
. You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.
|
14.
|
NOT AN EMPLOYMENT AGREEMENT
. The Notice and the Terms and Conditions are not an employment agreement, and no provision of the Notice or these Terms and Conditions 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.
|
15.
|
SECURITIES ACT LEGEND.
If you are an officer or affiliate of the Company under the Securities Act of 1933, as amended (the “
Securities Act
”), you consent to the placing on
|
16.
|
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. No member of the Company Group and no member of the Board of Directors shall be liable for any act, omission or determination taken or made in good faith with respect to the Notice, the Terms and Conditions or the TSR Restricted Stock Units granted thereunder.
|
17.
|
EXECUTION OF RECEIPTS AND RELEASES
. Any payment of cash or any issuance or transfer of shares of Common Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance to execute a release and receipt therefor in such form as it shall determine.
|
18.
|
FUNDING.
You shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments that the Company may make to aid it in meeting its obligations under the Notice and the Terms and Conditions. Your right to receive payments under the Notice and the Terms and Conditions shall be no greater than the rights of an unsecured general creditor of the Company.
|
19.
|
NO GUARANTEE OF INTERESTS
. The Board of Directors and the Company do not guarantee the Common Stock of the Company from loss or depreciation.
|
20.
|
INFORMATION CONFIDENTIAL
. As partial consideration for the granting of the award under the Notice and the Terms and Conditions, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to these Terms and Conditions or the Notice; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of granting any such future award to you.
|
21.
|
SUCCESSORS
. These Terms and Conditions and the Notice shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.
|
22.
|
SEVERABILITY
. If any provision of these Terms and Conditions or the Notice is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and these Terms and Conditions
|
23.
|
HEADINGS
. The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.
|
24.
|
GOVERNING LAW
. All questions arising with respect to the provisions of these Terms and Conditions and the Notice shall be determined by application of the laws of Delaware, without giving any effect to any conflict of law provisions thereof, except to the extent Delaware state law is preempted by federal law. The obligation of the Company to sell and deliver Common Stock is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Common Stock.
|
25.
|
CONSENT TO TEXAS JURISDICTION AND VENUE
. You hereby consent and agree that state courts located in Montgomery County, Texas and the United States District Court for the Southern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the TSR Restricted Stock Units, these Terms and Conditions, or the Notice. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to such jurisdiction as an inconvenient forum.
|
26.
|
AMENDMENT
. These Terms and Conditions and the Notice may be amended by the Committee at any time;
provided
, that no such amendment shall adversely affect the TSR Restricted Stock Units in any material way, without your written consent.
|
27.
|
MISCELLANEOUS
. The Notice is awarded pursuant to and is subject to all of the terms and conditions of the Plan (including any amendments thereto) and these Terms and Conditions. In the event of a conflict between these Terms and Conditions, the Plan and the Notice, the Plan provisions will control. The term “
you
” and “
your
” refer to the Awardee named in the Notice. Capitalized terms that are not defined herein shall have the meanings ascribed to such terms in the Plan or the Notice.
|
|
Awardee
|
Date of Award:
|
February 10, 2016
|
Vesting Dates:
|
First Vesting Date: August 15, 2016
Second Vesting Date: August 15, 2017
Third Vesting Date: August 15, 2018
Fourth Vesting Date: February 15, 2019
|
Number of Restricted Stock Units:
|
__________________
|
(a)
|
on the First Vesting Date, the Forfeiture Restrictions shall lapse as to one-fourth of the Cash-Settled Restricted Stock Units subject to this Agreement; and
|
(b)
|
on each succeeding Vesting Date, the Forfeiture Restrictions shall lapse as to an additional one-fourth of the Cash-Settled Restricted Stock Units subject to this Agreement, so that on the Fourth Vesting Date the Forfeiture Restrictions shall have lapsed as to all of the Cash-Settled 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 Group terminates, or a Change of Control of the Company occurs, in each case, prior to the Fourth Vesting Date specified in the Cash-Settled Restricted Stock Unit Award Agreement (the “
Agreement
”) to which these Terms and Conditions are attached (the “
Terms and Conditions
”).
|
2.
|
PAYMENT IN SETTLEMENT OF VESTED CASH-SETTLED RSUS
. Payment in respect of vested Cash-Settled Restricted Stock Units shall be made as soon as practicable,
|
3.
|
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 a payment with respect to a Cash-Settled Restricted Stock Unit, 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.
|
4.
|
TAX WITHHOLDING
. To the extent that the receipt of the Cash-Settled Restricted Stock Units or the lapse of any applicable Forfeiture Restrictions or payment in settlement thereof 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, lapse or payment, 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 payment with respect to a Cash-Settled Restricted Stock Unit made under the
|
5.
|
NONTRANSFERABILITY.
Neither the Cash-Settled Restricted Stock Units, the Agreement nor the Terms and Conditions is transferable by you otherwise than by will or by the laws of descent and distribution. The community interest, if any, of any spouse of Awardee in any of the Cash-Settled Restricted Stock Units shall be subject to all of the terms, conditions and restrictions of the Agreement and the Terms and Conditions, and shall be forfeited and surrendered to the Company upon the occurrence of any of the events requiring Awardee’s interest in such Cash-Settled Restricted Stock Units to be so forfeited and surrendered pursuant to the Agreement or the Terms and Conditions.
|
6.
|
CAPITAL ADJUSTMENTS AND REORGANIZATIONS.
|
7.
|
CASH-SETTLED 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 Cash-Settled Restricted Stock Units that are awarded hereby.
|
8.
|
NO ADVICE REGARDING CASH-SETTLED RSUs.
You acknowledge and agree that (a) you are not relying upon any written or oral statement or representation of the Company Group, or any of its respective employees, directors, officers, attorneys or agents (collectively, the “
Company Parties
”) regarding the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the Cash-Settled Restricted Stock Units, and (b) in deciding to accept the Cash-Settled Restricted Stock Units, you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted. You hereby release, acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations,
|
9.
|
EMPLOYMENT RELATIONSHIP.
For purposes of the Agreement and these Terms and Conditions, you shall be considered to be in the employment of the Company Group as long as you have an employment relationship with a member of 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 and the Committee’s determination shall be final and binding on all Persons. The Committee may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company or the Company Group, provided that rights to the Cash-Settled Restricted Stock Units during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began. Records of the Company or of the Company Group regarding your period of service, termination of service and the reason(s) therefor, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.
|
10.
|
FURNISH INFORMATION
. You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.
|
11.
|
NOT AN EMPLOYMENT AGREEMENT
. The Agreement and the Terms and Conditions are not an employment agreement, and no provision of the Agreement or these Terms and Conditions 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.
|
12.
|
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. No member of the Company Group and no member of the Board of Directors shall be liable for any act, omission or determination taken or made in good faith with respect to the Agreement, the Terms and Conditions or the Cash-Settled Restricted Stock Units granted thereunder.
|
13.
|
EXECUTION OF RECEIPTS AND RELEASES
. Any payment of cash or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment to execute a release and receipt therefor in such form as it shall determine.
|
14.
|
FUNDING.
You shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments that the Company may make to aid it in meeting its obligations under the Agreement and the Terms and Conditions. Your right to receive payments under the Agreement and the Terms and Conditions shall be no greater than the rights of an unsecured general creditor of the Company.
|
15.
|
NO GUARANTEE OF INTERESTS
. The Board of Directors and the Company do not guarantee the Common Stock of the Company underlying the Cash-Settled Restricted Stock Units from loss or depreciation.
|
16.
|
INFORMATION CONFIDENTIAL
. As partial consideration for the granting of the award under the Agreement and the Terms and Conditions, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to these Terms and Conditions or the Agreement; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of granting any such future award to you.
|
17.
|
SUCCESSORS
. These Terms and Conditions and the Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.
|
18.
|
SEVERABILITY
. If any provision of these Terms and Conditions or the Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and these Terms and Conditions and the Agreement shall be construed and enforced as if the illegal or invalid provision had never been included.
|
19.
|
HEADINGS
. The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.
|
20.
|
GOVERNING LAW
. All questions arising with respect to the provisions of these Terms and Conditions and the Agreement shall be determined by application of the laws of Delaware, without giving any effect to any conflict of law provisions thereof, except to the extent Delaware state law is preempted by federal law.
|
21.
|
CONSENT TO TEXAS JURISDICTION AND VENUE
. You hereby consent and agree that state courts located in Montgomery County, Texas and the United States District Court for the Southern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the Cash-Settled Restricted Stock Units, these Terms and Conditions, or the Agreement. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to such jurisdiction as an inconvenient forum.
|
22.
|
AMENDMENT
. These Terms and Conditions and the Agreement may be amended by the Committee at any time;
provided
, that no such amendment shall adversely affect the Cash-Settled Restricted Stock Units in any material way, without your written consent.
|
23.
|
MISCELLANEOUS
. 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 Agreement.
|
i)
|
the Company is not the surviving Person in any merger, consolidation or other reorganization (or survives only as a subsidiary of another Person);
|
ii)
|
the consummation of a merger or consolidation of the Company with another Person pursuant to which less than 50% of the outstanding voting securities of the surviving or resulting corporation are issued in respect of the capital stock of the Company;
|
iii)
|
the Company sells, leases or exchanges all or substantially all of its assets to any other Person;
|
iv)
|
the Company is to be dissolved and liquidated;
|
v)
|
any Person, including a “group” as contemplated by Section13(d)(3) of the Securities Exchange Act of 1934, acquires or gains ownership or control (including the power to vote) of more than 50% of the outstanding shares of the Company’s voting stock (based upon voting power); or
|
vi)
|
as a result of or in connection with a contested election of directors, the Persons who were directors of the Company before such election cease to constitute a majority of the Board.
|
e)
|
“
Committee
” means the Compensation & Management Development Committee of the Board.
|
h)
|
“
Eligible Employee
” means, with respect to a particular Performance Period, each employee of the Company or a Subsidiary who was (i) employed by the Company or a Subsidiary on both October 1 and December 31 of such Performance Period and (ii) recommended by the Chief Executive Officer of the Company to receive an Award.
|
i)
|
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
|
j)
|
“
Incentive Pool
” means the aggregate amount to be awarded with respect to a particular Performance Period as determined pursuant to Article IV.
|
k)
|
“
Performance Period
” means any calendar year beginning on or after January 1, 2011.
|
l)
|
“
Person
” means any individual, partnership, corporation, limited liability company, trust, incorporated or unincorporated organization or association or other legal entity of any kind.
|
m)
|
“
Section 409A
” means Section 409A of the Code and any applicable regulations or rulings thereunder.
|
n)
|
“
Subsidiary
” means any entity that is consolidated with the Company for financial accounting purposes in accordance with generally accepted accounting principles.
|
a)
|
The Board shall have the right to amend this Amended and Restated 2011 Plan from time to time, to terminate it entirely or to direct the discontinuance of Awards either temporarily or permanently. The Board may make any amendment to any outstanding Award that it believes is necessary or helpful to comply with any applicable law including, without limitation, Section 409A. However, no amendment, discontinuance or termination of this Amended and Restated 2011 Plan shall operate to annul an outstanding Award unless otherwise provided by the terms of this Amended and Restated 2011 Plan. The term of this Amended and Restated 2011 Plan shall be from its Effective Date until terminated by the Board.
|
b)
|
In furtherance, and not in limitation, of paragraph (a) above, at any time determined by the Board, this Amended and Restated 2011 Plan may be restructured by the Board to, among any other alterations or changes determined by the Board in its sole discretion, (i) alter the eligibility requirements for awards under such plan or (ii) provide for a Performance Period that is shorter or longer.
|
c)
|
Notwithstanding any provision of this Amended and Restated 2011 Plan to the contrary, in the event of a Change in Control: (i) the Committee shall determine the amount of the Incentive Pool assuming that (A) the Performance Period ended on the date of the Change of Control, and (B) the determination of whether, and to what extent, the Company has satisfied the applicable performance factors shall be based on actual performance of the Company through the date of the Change of Control; and (ii) each Eligible Employee shall be deemed to have earned an amount equal to the full amount of the Award that such Eligible Employee would have been entitled to receive based on the Incentive Pool determined in accordance with clause (i) of this paragraph, multiplied by the fraction, the numerator of which is the number of days the Eligible Employee was employed by the Company or its Subsidiaries during the Performance Period and the denominator of which is the total number of days in the Performance Period (the “
Pro-Rata Award
”), which Pro-Rata Award shall be paid to the Eligible Employee in cash within 30 days of the Change in Control.
|
a)
|
Neither this Amended and Restated 2011 Plan nor any grant of Awards under this Amended and Restated 2011 Plan shall confer on any employee the right to continued employment by the Company or any Subsidiary, or affect in any way the right of the Company or such Subsidiary to terminate the employment of such employee at any time. Any question as to whether and when there has been a termination of an employee’s employment and the cause of such termination shall be determined by the Committee, and its determination shall be final.
|
b)
|
Except to the extent set forth herein as to the rights of the estates or beneficiaries of employees to receive payments, Awards under this Amended and Restated 2011 Plan are non-assignable and non-transferable and are not subject to anticipation, adjustment, alienation, encumbrance, garnishment, attachment or levy of any kind.
|
c)
|
Neither the establishment of this Amended and Restated 2011 Plan nor the granting of Awards shall be deemed to create a trust. This Amended and Restated 2011 Plan and all unpaid awards shall constitute an unfunded, unsecured liability of the Company to make payments in accordance with the provisions of this Amended and Restated 2011 Plan, and no Person shall have any security or other interest in any assets of the Company or otherwise.
|
d)
|
The existence of this Amended and Restated 2011 Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to authorize or consummate any merger or consolidation of the Company, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.
|
e)
|
Neither the officers nor the directors of the Company nor the members of the Committee shall under any circumstances have any liability with respect to this Amended and Restated 2011 Plan or its administration except for gross and intentional malfeasance. The officers and directors of the Company and the members of the Committee may rely upon opinions of counsel as to all matters, including the creation, operation and interpretation of this Amended and Restated 2011 Plan.
|
f)
|
No portion of this Amended and Restated 2011 Plan shall be effective at any time when such portion violates an applicable state or federal law, regulation or governmental order or directive that is subject to sanctions, whether direct or indirect.
|
BORROWER:
|
NEWFIELD EXPLORATION COMPANY
|
|
By:
/s/ Lawrence S. Massaro
Lawrence S. Massaro
Executive Vice President and
Chief Financial Officer
|
ADMINISTRATIVE AGENT AND LENDER:
|
JPMORGAN CHASE BANK, N.A.
|
|
By:
/s/ Anson Williams
Name: Anson Williams
Title: Authorized Officer
|
|
|
LENDER:
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
|
|
By:
/s/ Ellen Cheng
Name: Ellen Cheng
Title: Vice President
|
|
|
LENDER:
|
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
|
|
By:
/s/ Kevin Sparks
Name: Kevin Sparks
Title: Director
|
|
|
LENDER:
|
THE BANK OF NOVA SCOTIA
|
|
By:
/s/ John Frazell
Name: John Frazell
Title: Director
|
|
|
|
|
|
|
LENDER:
|
SCOTIABANK, INC.
|
|
By:
/s/ J.F. Todd
Name: J.F. Todd
Title: Managing Director
|
|
|
|
|
|
|
LENDER:
|
U.S. BANK NATIONAL ASSOCIATION
|
|
By:
/s/ Nicholas T. Hanford
Name: Nicholas T. Hanford
Title: Vice President
|
|
|
LENDER:
|
SUMITOMO MITSUI BANKING CORPORATION
|
|
By:
/s/ James D. Weinstein
Name: James D. Weinstein
Title: Managing Director
|
|
|
LENDER:
|
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
|
|
By:
/s/ Nupur Kumar
Name: Nupur Kumar
Title: Authorized Signatory
By:
/s/ Lorenz Meier
Name: Lorenz Meier
Title: Authorized Signatory
|
|
|
LENDER:
|
BMO HARRIS BANK N.A.
|
|
By:
/s/ Melissa Guzmann
Name: Melissa Guzmann
Title: Vice President
|
|
|
LENDER:
|
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH
|
|
By:
/s/ Trudy Nelson
Name: Trudy Nelson
Title: Authorized Signatory
|
|
By:
/s/ William M. Reid
Name: William M. Reid
Title: Authorized Signatory
|
|
|
|
|
LENDER:
|
GOLDMAN SACHS BANK USA
|
|
By:
/s/ Jerry Li
Name: Jerry Li
Title: Authorized Signatory
|
|
|
|
|
|
|
LENDER:
|
MIZUHO BANK LTD.
|
|
By:
/s/ Leon Mo
Name: Leon Mo
Title: Authorized Signatory
|
|
|
|
|
|
|
LENDER:
|
FIFTH THIRD BANK
|
|
By:
/s/ Jonathan H. Lee
Name: Jonathan H. Lee
Title: Director
|
|
|
|
|
|
|
LENDER:
|
SOCIÉTÉ GÉNÉRALE
|
|
By:
/s/ David M. Bornstein
Name: David M. Bornstein
Title: Director
|
|
|
|
|
LENDER:
|
ROYAL BANK OF CANADA
|
|
By:
/s/ Kristan Spivey
Name: Kristan Spivey
Title: Authorized Signatory
|
|
|
|
|
|
|
LENDER:
|
BARCLAYS BANK PLC
|
|
By:
/s/ Ronnie Glenn
Name: Ronnie Glenn
Title: Vice President
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended
March 31, 2016
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 (the Registrant's fourth fiscal quarter in the case of an annual report) 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 the 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: May 3, 2016
|
By:
|
/s/ LEE K. BOOTHBY
|
|
|
Lee K. Boothby
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended
March 31, 2016
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 (the Registrant's fourth fiscal quarter in the case of an annual report) 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 the 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: May 3, 2016
|
By:
|
/s/ LAWRENCE S. MASSARO
|
|
|
Lawrence S. Massaro
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal 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: May 3, 2016
|
/s/ LEE K. BOOTHBY
|
|
Lee K. Boothby
|
|
(Principal Executive 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: May 3, 2016
|
/s/ LAWRENCE S. MASSARO
|
|
Lawrence S. Massaro
|
|
(Principal Financial Officer)
|