Apache 10-Q 2007 Q3 Quarterly report

EXHIBIT 12.1

APACHE CORPORATION
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(In Thousands)

	Nine Months Ended
	September 30,
	2007		2006		2006		2005		2004		2003		2002
EARNINGS
Pretax income from continuing operations before preferred interests of subsidiaries	$	3,126,965	$	3,233,276	$	4,009,595	$	4,206,254	$	2,663,083	$	1,930,925	$	915,194
Add: Fixed charges excluding capitalized interest and preferred interest requirements of consolidated subsidiaries		192,712		123,983		178,399		138,399		134,797		132,820		128,730
Adjusted Earnings	$	3,319,677	$	3,357,259	$	4,187,994	$	4,344,653	$	2,797,880	$	2,063,745	$	1,043,924
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Interest expense including capitalized interest (1,5)	$	230,487	$	154,073	$	217,454	$	175,419	$	168,090	$	173,045	$	155,667
Amortization of debt expense		2,421		1,530		2,048		3,748		2,471		2,163		1,859
Interest component of lease rental expenditures (2)		16,358		14,563		20,198		16,220		14,984		14,458		11,895
Preferred interest requirements of consolidated subsidiaries (3)		—		—		—		—		—		11,805		19,581
Fixed charges		249,266		170,166		239,700		195,387		185,545		201,471		189,002
Preferred stock dividend requirements (4)		7,656		6,780		8,922		9,105		9,058		9,968		17,540
Combined Fixed Charges and Preferred Stock Dividends	$	256,922	$	176,946	$	248,622	$	204,492	$	194,603	$	211,439	$	206,542
Ratio of Earnings to Fixed Charges		13.32		19.73		17.47		22.24		15.08		10.24		5.52
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends		12.92		18.97		16.84		21.25		14.38		9.76		5.05

(1)	The company did not receive a tax benefit for $5 million of transaction costs written off to interest expense when the company retired its preferred interests of subsidiaries in September 2003. Given the non-deductibility of the charge, $9 million of pre-tax income was required to cover the $5 million write-off. Accordingly, interest expense has been grossed up by $4 million.
(2)	Represents the portion of rental expense assumed to be attributable to interest factors of related rental obligations determined at interest rates appropriate for the period during which the rental obligations were incurred. Approximately 32 to 34 percent applies to rental payments for all periods presented.
(3)	The company did not receive a tax benefit for a portion of its preferred interests of consolidated subsidiaries. This amount represents the pre-tax earnings that would be required to cover preferred interests requirements of consolidated subsidiaries. In September 2003, the company retired its preferred interests of subsidiaries.
(4)	The company does not receive a tax benefit for its preferred stock dividends. This amount represents the pre-tax earnings that would be required to cover its preferred stock dividends.
(5)	Interest expense related to the provisions of Financial Accounting Standards Board Interpretation No. 48 (FIN 48) “Accounting for Uncertainty in Income Taxes” is not included in the computation of ratios of earnings to fixed charges and combined fixed charges and preferred stock dividends.