Apache 10-Q2008 Q1 Quarterly report

Filed: 12 May 08, 12:00am

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Removed: agreed, Anadarko, arbitration, arising, arrangement, award, Bcf, behalf, China, closed, combined, controlling, corporate, coverage, declared, decreased, deductible, deferred, discussed, downtime, drop, effect, endorsement, Exmouth, extension, FIN, flat, funded, geographic, governmental, implementation, incidental, indexed, individually, Interpretation, interruption, joint, judgment, lawsuit, limiting, liquid, lowered, managed, manner, maturing, meet, Obaiyed, occurrence, offloading, offsetting, ordinary, partner, policy, premium, prescribing, principal, profit, Qasr, received, recognition, redeemable, repay, reportable, require, reserved, retained, return, September, set, settle, similarly, situated, slight, storage, styledBarasich, supplemental, Texaco, throughput, transaction, Transmission, uncertain, Uncertainty, unrecognized, unsecured, updating, venture, vessel, voted, weakening, working, wreck

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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)


	Quarter Ended
	March 31,
	2008		2007		2007		2006		2005		2004		2003
EARNINGS
Pretax income from continuing operations before preferred interests of subsidiaries	$	1,675,887	$	814,633	$	4,672,612	$	4,009,595	$	4,206,254	$	2,663,083	$	1,930,925
Add: Fixed charges excluding capitalized interest and preferred interest requirements of consolidated subsidiaries		53,960		50,018		258,221		178,399		138,399		134,797		132,820

Adjusted Earnings	$	1,729,847	$	864,651	$	4,930,833	$	4,187,994	$	4,344,653	$	2,797,880	$	2,063,745


FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Interest expense including capitalized interest (1,5)	$	69,307	$	65,732	$	308,235	$	217,454	$	175,419	$	168,090	$	173,045
Amortization of debt expense		851		694		3,310		2,048		3,748		2,471		2,163
Interest component of lease rental expenditures (2)		5,379		5,368		22,424		20,198		16,220		14,984		14,458
Preferred interest requirements of consolidated subsidiaries (3)		—		—		—		—		—		—		11,805


Fixed charges		75,537		71,794		333,969		239,700		195,387		185,545		201,471

Preferred stock dividend requirements (4)		2,330		2,347		9,437		8,922		9,105		9,058		9,968


Combined Fixed Charges and Preferred Stock Dividends	$	77,867	$	74,141	$	343,406	$	248,622	$	204,492	$	194,603	$	211,439


Ratio of Earnings to Fixed Charges		22.90		12.04		14.76		17.47		22.24		15.08		10.24


Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends		22.22		11.66		14.36		16.84		21.25		14.38		9.76


(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.