Note 9 — Asset Retirement Obligation
The following table reflects the changes in our asset retirement obligation during the years ended
December 31, 2011, 2010 and 2009 (in thousands):
Year Ended December 31,
2011
2010
2009
Asset retirement obligation – beginning of period . . . . . $ 239,432 $ 221,367 $ 169,809
Liabilities incurred in acquisitions . . . . . . . . . . . . . . . . . .
6
246
-
Property dispositions and other . . . . . . . . . . . . . . . . . . . .
(19,406)
(7,883)
-
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,998)
(3,718)
(3,699)
Change in estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,463
6,179
39,518
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,177
17,702
14,332
Asset retirement additions . . . . . . . . . . . . . . . . . . . . . . . .
7,707
5,539
1,407
Asset retirement obligation – end of period
(1)
. . . . . . . . . $ 238,381 $ 239,432 $ 221,367
(1) $7.7 million and $13.9 million are included in other current liabilities at December 31, 2011 and 2010, respectively.
Our change in estimate during 2009 is attributable to increased costs to plug and abandon wells
and retire equipment, primarily in our California fields, and a change in estimated useful lives of certain
offshore platforms for which we retain the asset retirement obligation.
Note 10 — Stock-Based and Other Compensation Plans
We have four stock incentive plans: the 2002 Stock Incentive Plan, or 2002 Plan, which provides
for a maximum of 1.5 million shares available for awards; the 2004 Stock Incentive Plan, or 2004 Plan,
which provides for a maximum of 8.4 million shares available for awards; the 2006 Incentive Plan, or
the 2006 Plan, which provides for a maximum of 5.0 million shares available for awards; and the 2010
Incentive Award Plan, or the 2010 Plan, which provides for a maximum of 5.0 million shares available
for awards. Our 2002 Plan, 2004 Plan and 2010 Plan provide for the grant of stock options and other
awards (including performance units, performance shares, share awards, restricted stock, restricted
stock units, or RSUs, and stock appreciation rights, or SARs) to our directors, officers, employees,
consultants and advisors. Our 2006 Plan provides for the grant of cash-only SARs and RSUs to
non-officer employees. Our compensation committee may grant options and SARs on such terms,
including vesting and payment forms, as it deems appropriate in its discretion, however, no option or
SAR may be exercised more than ten years after its grant date, and the purchase price for incentive
stock options and non-qualified stock options may not be less than 100% of the fair market value of our
common stock on the date of grant. The compensation committee may grant restricted stock awards,
RSUs, share awards, performance units and performance shares on such terms and conditions as it
may decide in its discretion.
Upon an event constituting a “change in control” (as defined in the plans) of PXP, all options and
SARs will become immediately exercisable in full. In addition, in such an event, unless otherwise
determined by our compensation committee, or employee agreement, generally all other awards will
vest and all restrictions on such awards will lapse. We may, at our discretion, issue new shares or use
treasury shares to satisfy vesting requirements.
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