Gulfport Energy Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

STOCK-BASED COMPENSATION

During the three and six months ended June 30, 2015, the Company’s stock-based compensation cost was $3.2 million and $6.7 million, respectively, of which the Company capitalized $1.3 million and $2.7 million, respectively, relating to its exploration and development efforts. During the three and six months ended June 30, 2014, the Company's stock-based compensation cost was $3.4 million and $7.7 million, respectively, of which the Company capitalized $1.3 million and $3.1 million, respectively, relating to its exploration and development efforts.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. Expected volatilities are based on the historical volatility of the market price of Gulfport’s common stock over a period of time ending on the grant date. Based upon the historical experience of the Company, the expected term of options granted is equal to the vesting period plus one year. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The 2013 Restated Stock Incentive Plan (which amended and restated the 2005 Plan) provides that all options must have an exercise price not less than the fair value of the Company’s common stock on the date of the grant.

No stock options were issued during the six months ended June 30, 2015 and 2014.

The Company has not declared dividends and does not intend to do so in the foreseeable future, and thus did not use a dividend yield. In each case, the actual value that will be realized, if any, depends on the future performance of the common stock and overall stock market conditions. There is no assurance that the value an optionee actually realizes will be at or near the value estimated using the Black-Scholes model.

A summary of the status of stock options and related activity for the six months ended June 30, 2015 is presented below:



	Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In thousands)
Options outstanding at December 31, 2014	5,000	$	9.07	0.69	$	163
Granted	—	—
Exercised	—	—			—
Forfeited/expired	—	—
Options outstanding at June 30, 2015	5,000	$	9.07	0.19	$	156
Options exercisable at June 30, 2015	5,000	$	9.07	0.19	$	156

The following table summarizes information about the stock options outstanding at June 30, 2015:



Exercise Price		Number Outstanding	Weighted Average Remaining Life (in years)	Number Exercisable
$	9.07	5,000	0.19	5,000
		5,000		5,000

The following table summarizes restricted stock activity for the six months ended June 30, 2015:



	Number of Unvested Restricted Shares		Weighted Average Grant Date Fair Value
Unvested shares as of December 31, 2014	387,245		$	55.87
Granted	100,226		44.04
Vested	(123,543	)	51.02
Forfeited	(4,000	)	57.91
Unvested shares as of June 30, 2015	359,928		$	54.22

Unrecognized compensation expense as of June 30, 2015 related to outstanding stock options and restricted shares was $15.4 million. The expense is expected to be recognized over a weighted average period of 1.52 years.