Cobalt International Energy, Inc.
Notes to Consolidated Financial Statements (Continued)
13. Seismic and Exploration Expenses
Seismic and exploration expenses consisted of the following:
For Year Ended December 31,
2014
2013
2012
($ in thousands)
Seismic costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $34,359 $63,721 $42,447
Leasehold delay rentals . . . . . . . . . . . . . . . . . . . . . . .
7,391 6,660 6,383
Drilling rig expense and other exploration expense . . .
43,817 3,832 12,753
$85,567 $74,213 $61,583
14. Equity based Compensation
Overview.
Under the Company’s Long Term Incentive Plan (the ‘‘Incentive Plan’’), the Company
may issue stock options, stock appreciation rights, restricted stock, restricted stock units, performance
awards and other stock-based awards to employees. At December 31, 2014, 4,043,263 shares remain
available for grant under the Incentive Plan. However, on January 15, 2015 the Company granted a
total of 379,746 shares of restricted stock and 746,268 stock options to three senior officers as required
pursuant to their employment agreements. In addition, on February 19, 2015, the Company awarded
2,757,982 shares of restricted stock and 1,526,835 stock appreciation rights to employees as part of the
Company’s annual long-term equity incentive program. These awards combined with first quarter new
hire and termination activity representing a net new issuance of 26,853 shares has resulted in 132,414
shares remaining available for issuance under the Incentive Plan as of February 19, 2015.
On January 28, 2010, the Company adopted the Non-Employee Directors Compensation Plan (the
‘‘NED Plan’’). Under the NED Plan, the Company may issue options, restricted stock units, other
stock-based award or retainers to non-employee directors. At December 31, 2014, 415,682 shares
remain available for grant under the NED Plan.
In accordance with ASC No. 718,
Compensation—Stock Compensation,
the Company recognizes
compensation cost for equity-based compensation to employees and non-employee directors over the
period during which the recipient is required to provide service in exchange for the award, based on
the fair value of the equity instrument on the date of grant, net of estimated forfeitures. If actual
forfeitures differ from the Company’s estimates, additional adjustments to compensation expense will
be required in future periods.
Restricted Stock.
The Company accounted for the restricted stock based on ASC Topic 718 as
described above. 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, 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.
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