Quarterly report pursuant to Section 13 or 15(d)

PREFERRED AND COMMON STOCK

 v2.3.0.11
PREFERRED AND COMMON STOCK
6 Months Ended
Jun. 30, 2011
PREFERRED AND COMMON STOCK [Abstract]  
PREFERRED AND COMMON STOCK
NOTE 5     PREFERRED AND COMMON STOCK

The Company's Articles of Incorporation authorize the issuance of up to 100,000,000 shares.  The shares are classified in two classes, consisting of 95,000,000 shares of common stock, par value $.001 per share, and 5,000,000 shares of preferred stock, par value $.001 per share. The board of directors is authorized to establish one or more series of preferred stock, setting forth the designation of each such series, and fixing the relative rights and preferences of each such series.  The Company has neither designated nor issued any shares of preferred stock.
 
In January 2011, CIT exercised the 300,000 warrants that were issued as part of the initial revolving credit facility (Note 8).  Total proceeds from the exercise of these warrants were $1.5 million.
 
In January 2011, the Company issued 2,000 shares of Common Stock to two employees of the Company as compensation for their services.  The shares were fully vested on the date of the grant.  The fair value of the stock issued was $55,960 or $27.98 per share, the market value of a share of common stock on the date the stock was issued.  The entire amount of this stock award was expensed in the six months ended June 30, 2011.
 
In January 2011, the Company issued an aggregate of 15,265 shares of Common Stock to four executives of the Company as compensation for their services.  The shares were fully vested on the date of the grant.  The fair value of the stock issued was $427,115 or $27.98 per share, the market value of a share of common stock on the date the stock was issued.  The entire amount of this stock award was expensed in the six months ended June 30, 2011.
 
In January 2011, the Company issued 100,000 shares of Common Stock to two executives of the Company as partial consideration for the amendment and restatement of their employment agreements, which included the extension of non-compete terms from one to three years along with various other modifications.  The executives were fully vested in the shares on the date of the grant.  The fair value of the stock issued was $2,798,000 or $27.98 per share, the market value of a share of common stock on the date the stock was issued.  The entire amount of this stock award was expensed in the six months ended June 30, 2011.
 
In April 2011, the Company issued 1,000 shares of Common Stock to an employee of the Company as compensation for their services.  The shares were fully vested on the date of the grant.  The fair value of the stock issued was $23,760 or $23.76 per share, the market value of a share of common stock on the date the stock was issued.  The entire amount of this stock award was expensed in the six months ended June 30, 2011.
 
In May 2011, the Company's board of directors approved a stock repurchase program to acquire up to $150 million shares of the Company's outstanding common stock.  The stock repurchase program will allow the Company to repurchase its shares from time to time in the open market, block transactions and in negotiated transactions.  The Company has not made any repurchases under this program to date.
 
As of June 30, 2011, the Company had accrued bonuses of approximately $1.4 million based on the year to date results of operations in comparison to year-end bonus attainment expectations. This includes, but is not limited to operational metrics, such as increased well count, increased proven reserves, additional strategic acreage acquisitions, and meeting various other targets as established by the Company's Compensation Committee.  Management anticipates these bonuses will be paid in the fourth quarter of 2011 through the issuance of shares of common stock.  The accrued bonuses as of June 30, 2011, are an estimate and are considered discretionary based on 2011 operations.  The Company's Compensation Committee has approved a plan to grant bonuses and the bonus accrual is based on that plan, but the June 30, 2011 bonus accrual balance has not been approved by the Compensation Committee.  The Company expensed $422,782 in share-based compensation related to this bonus accrual in the six months ended June 30, 2011.  The remainder of bonus was capitalized into the full cost pool. As of June 30, 2010, the Company had accrued bonuses of approximately $1.8 million, of which $801,775 were expensed in share-based compensation.  The bonuses accrued as June 30, 2010 were paid in the fourth quarter of 2010 through the issuance of shares of common stock.