Exhibit 12.1
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our computation of ratio of earnings to fixed charges:
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| Years ended December 31, |
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| 2011 |
| 2010 |
| 2009 |
| 2008 |
| 2007 |
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Earnings: |
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Income (loss) from continuing operations before income taxes and cumulative change in accounting principle |
| $ | 841,481 |
| $ | 913,731 |
| $ | (488,481 | ) | $ | (1,451,649 | ) | $ | 542,724 |
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Additions: |
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Fixed charges as shown below |
| 37,380 |
| 38,641 |
| 41,780 |
| 35,214 |
| 39,915 |
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Distributions received from equity-method investees |
| — |
| — |
| — |
| 39 |
| 3,015 |
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| 37,380 |
| 38,641 |
| 41,780 |
| 35,253 |
| 42,930 |
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Subtractions: |
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Equity in income of investees |
| — |
| — |
| (2,353 | ) | 39 |
| 4,194 |
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Interest capitalized |
| 29,057 |
| 29,215 |
| 23,408 |
| 22,108 |
| 19,680 |
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| 29,057 |
| 29,215 |
| 21,055 |
| 22,147 |
| 23,874 |
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Earnings (losses) as adjusted |
| $ | 849,804 |
| $ | 923,157 |
| $ | (467,756 | ) | $ | (1,438,543 | ) | $ | 561,780 |
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Fixed charges: |
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Interest on indebtedness, expensed or capitalized |
| 35,611 |
| 36,527 |
| 39,615 |
| 32,064 |
| 37,966 |
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Amortization of discount on indebtedness, expensed or capitalized |
| — |
| 86 |
| 162 |
| 1,014 |
| 1,139 |
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Amortization of premium on indebtedness, expensed or capitalized |
| — |
| — |
| — |
| — |
| (1,146 | ) | |||||
Interest within rent expense |
| 1,769 |
| 2,028 |
| 2,003 |
| 2,136 |
| 1,956 |
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Total fixed charges |
| $ | 37,380 |
| $ | 38,641 |
| $ | 41,780 |
| $ | 35,214 |
| $ | 39,915 |
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Ratio of earnings to fixed charges |
| 22.7 |
| 23.9 |
| — | (1) | — | (2) | 14.1 |
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(1) In 2009, earnings were insufficient to cover fixed charges by $509.5 million and therefore no ratio is shown. The insufficiency was primarily a result of a non-cash impairment of oil and gas properties totaling $791 million that was recorded due to a significant decrease in natural gas prices during the first quarter of 2009.
(2) In 2008, earnings were insufficient to cover fixed charges by $1.474 billion and therefore no ratio is shown. The insufficiency was primarily a result of non-cash impairments of oil and gas properties totaling $2.2 billion that were recorded due to declines in commodity prices during the last half of 2008.
The ratio of earnings to fixed charges was computed by dividing earnings by fixed charges. Earnings consist of income from continuing operations before income taxes and cumulative change in accounting principle plus distributions received from equity investments, and fixed charges, minus income from equity investees and capitalized interest. Fixed charges consist of interest expensed, which includes amortization of the discount and premium related to indebtedness, an estimated interest component in net rental expense, and interest capitalized.
