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56 Chevron Corporation 2011 Annual Report
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
construction is in progress, with initial recognition of proved
reserves expected upon reaching “economic producibility”
per SEC guidelines; (e) $14 – miscellaneous activities for two
projects with smaller amounts suspended. While progress was
being made on all 47 projects, the decision on the recogni-
tion of proved reserves under SEC rules in some cases may
not occur for several years because of the complexity, scale
and negotiations connected with the projects. e majority of
these decisions are expected to occur in the next three years.
e $1,877 of suspended well costs capitalized for a
period greater than one year as of December 31, 2011, repre-
sents 161 exploratory wells in 47 projects. e tables below
contain the aging of these costs on a well and project basis:
Number
Aging based on drilling completion date of individual wells: Amount of wells
1997–2000 $ 49 16
2001–2005 396 47
2006–2010 1,432 98
Total $ 1,877 161
Aging based on drilling completion date of last Number
suspended well in project: Amount of projects
1999 $ 8 1
2003–2006 345 10
2007–2011 1,524 36
Total $ 1,877 47
Note 20
Stock Options and Other Share-Based Compensation
Compensation expense for stock options for 2011, 2010 and
2009 was $265 ($172 after tax), $229 ($149 after tax) and
$182 ($119 after tax), respectively. In addition, compensa-
tion expense for stock appreciation rights, restricted stock,
performance units and restricted stock units was $214 ($139
after tax), $194 ($126 after tax) and $170 ($110 after tax) for
2011, 2010 and 2009, respectively. No signicant stock-based
compensation cost was capitalized at December 31, 2011
and 2010.
Cash received in payment for option exercises under all
share-based payment arrangements for 2011, 2010 and 2009
was $948, $385 and $147, respectively. Actual tax benets
realized for the tax deductions from option exercises were
$121, $66 and $25 for 2011, 2010 and 2009, respectively.
Cash paid to settle performance units and stock
appreciation rights was $151, $140 and $89 for 2011, 2010
and 2009, respectively.
Chevron Long-Term Incentive Plan (LTIP) Awards under
the LTIP may take the form of, but are not limited to,
stock options, restricted stock, restricted stock units, stock
appreciation rights, performance units and nonstock
grants. From April 2004 through January 2014, no more
than 160 million shares may be issued under the LTIP,
and no more than 64 million of those shares may be in a
form other than a stock option, stock appreciation right or
award requiring full payment for shares by the award recipi-
ent. For the major types of awards outstanding as of
December 31, 2011, the contractual terms vary between
three years for the performance units and 10 years for the
stock options and stock appreciation rights.
Texaco Stock Incentive Plan (Texaco SIP) On the closing
of the acquisition of Texaco in October 2001, outstand-
ing options granted under the Texaco SIP were converted
to Chevron options. ese options, which had 10-year
contractual lives extending into 2011, retained a provision
for being restored. is provision enabled a participant
who exercised a stock option to receive new options equal
to the number of shares exchanged or who had shares
withheld to satisfy tax withholding obligations to receive
new options equal to the number of shares exchanged or
withheld. e restored options were fully exercisable six
months after the date of grant, and the exercise price was
the market value of the common stock on the day the
restored option was granted. Beginning in 2007, restored
options were issued under the LTIP. No further awards
may be granted under the former Texaco plans.
Unocal Share-Based Plans (Unocal Plans) When Chevron
acquired Unocal in August 2005, outstanding stock
options and stock appreciation rights granted under vari-
ous Unocal Plans were exchanged for fully vested Chevron
options and appreciation rights. ese awards retained the
same provisions as the original Unocal Plans. Unexercised
awards began expiring in early 2010 and will continue to
expire through early 2015.
Note 19 Accounting for Suspended Exploratory Wells – Continued