Cobalt International Energy, Inc.
Notes to Consolidated Financial Statements (Continued)
F-13
1. Summary of Significant Accounting Policies (Continued)
Equity-Based Compensation
The Company accounts for stock-based compensation at fair value. The Company grants various types of stock-based awards
including stock options, restricted stock and performance-based awards. The fair value of stock option awards is determined using the
Black-Scholes-Merton option-pricing model. For restricted stock awards with market conditions, the fair value of the awards is
measured using the asset-or-nothing option pricing model. Restricted stock awards without market conditions and the performance-
based awards are valued using the market price of the Company’s common stock on the grant date. The Company records
compensation cost, net of estimated forfeitures, on a straight-line basis for stock-based compensation awards over the requisite service
period except for performance-based awards. For performance-based awards, compensation cost is recognized over the requisite
service period as and when the Company determines that the achievement of the performance condition is probable, using the per-
share fair value measured at grant date.
See Note 14 – Equity Based Compensation.
Earnings (Loss) Per Share
Basic income (loss) per share was calculated by dividing net income or loss applicable to common shares by the weighted
average number of common shares outstanding during the periods presented. The calculation of diluted income (loss) per share
includes the potential dilutive impact of non-vested restricted shares, non-vested restricted stock units, outstanding stock options, the
2.625% convertible senior notes due 2019 and the 3.125% convertible senior notes due 2024, during the period, unless their effect is
anti-dilutive. For the year ended December 31, 2015, 9,653,026 shares of non-vested restricted stock, non-vested restricted stock units,
outstanding stock options, the 2.625% convertible senior notes due 2019 and the 3.125% convertible senior notes due 2024, were
excluded from the diluted income (loss) per share because they are anti-dilutive. For the year ended December 31, 2014, 5,997,374
shares of non-vested restricted stock, non-vested restricted stock units, outstanding stock options and the 2.625% convertible senior
notes due 2019 were excluded from the diluted income (loss) per share because they are anti-dilutive. For the year ended
December 31, 2013, 6,735,046 shares of non-vested restricted stock, non-vested restricted stock units and outstanding stock options
were excluded from the diluted income (loss) per share because they are anti-dilutive.
Operating Costs and Expenses
Expenses consist primarily of the costs of acquiring and processing of geological and geophysical data, exploration, and
appraisal drilling expenses, consultants, telecommunications, payroll and benefit costs, information system and legal costs, office rent,
contract costs, and bookkeeping and audit fees.
2. Cash and Cash Equivalents
As of December 31, 2015 and 2014, cash and cash equivalents consisted of the following:
December 31,
2015
December 31,
2014
($ in thousands)
Cash at banks ............................................................................. $ 33,173 $
45,733
Money market funds ..................................................................
—
122,218
Held-to-maturity securities(1)....................................................
38,420
78,753
$ 71,593 $
246,704
(1) These securities mature three months or less from the date of purchase.
