Exhibit 12
CHESAPEAKE ENERGY CORPORATION
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
(dollars in 000's)
Year Ended Dec. 31, 1998 | Year Ended Dec. 31, 1999 | Year Ended Dec. 31, 2000 | Year Ended Dec. 31, 2001 | Year Ended Dec. 31, 2002 | Six Months Ended June 30, 2003 | |||||||||||||||
EBITDA | ||||||||||||||||||||
Income before income taxes and extraordinary item | (920,520 | ) | 35,030 | 196,162 | 438,365 | 67,140 | 247,358 | |||||||||||||
Interest | 68,249 | 81,052 | 86,256 | 98,321 | 111,280 | 72,800 | ||||||||||||||
Writedown of oil and gas property | 826,000 | — | — | — | — | — | ||||||||||||||
Writedown of other assets | 55,000 | — | — | — | — | — | ||||||||||||||
Risk Management (Income) Loss | — | — | — | (84,789 | ) | 88,018 | (30,794 | ) | ||||||||||||
Impairments of investments in securities | — | — | — | 10,079 | — | — | ||||||||||||||
Gain on sale of Canada | — | — | — | (27,000 | ) | — | — | |||||||||||||
Loss on investment in Seven Seas | — | — | — | — | 17,201 | — | ||||||||||||||
Loss on repurchases of Chesapeake debt | — | — | — | — | 2,626 | — | ||||||||||||||
Gothic Stand-by Credit Facility Costs | — | — | — | 3,392 | — | — | ||||||||||||||
DD&A | 154,720 | 102,854 | 108,772 | 181,565 | 235,198 | 175,990 | ||||||||||||||
EBITDA | 183,449 | 218,936 | 391,190 | 619,933 | 521,463 | 465,354 | ||||||||||||||
Income before income taxes and extraordinary item | $ | (920,520 | ) | $ | 35,030 | $ | 196,162 | $ | 438,365 | $ | 67,140 | 247,358 | ||||||||
Interest | 68,249 | 81,052 | 86,256 | 98,321 | 111,280 | 72,800 | ||||||||||||||
Amortization of capitalized interest | 12,240 | 1,047 | 1,226 | 1,784 | 1,804 | 1,101 | ||||||||||||||
Bond discount amortization (a) | — | — | — | — | — | — | ||||||||||||||
Loan cost amortization | 2,516 | 3,338 | 3,669 | 4,022 | 4,962 | 3,445 | ||||||||||||||
Earnings | $ | (837,515 | ) | $ | 120,467 | $ | 287,313 | $ | 542,492 | $ | 185,186 | 324,704 | ||||||||
Interest expense | $ | 68,249 | $ | 81,052 | $ | 86,256 | $ | 98,321 | $ | 111,280 | 72,800 | |||||||||
Capitalized interest | 6,470 | 3,356 | 2,452 | 4,719 | 4,976 | 5,389 | ||||||||||||||
Bond discount amortization (a) | — | — | — | — | — | — | ||||||||||||||
Loan cost amortization | 2,516 | 3,338 | 3,669 | 4,022 | 4,962 | 3,445 | ||||||||||||||
Fixed Charges | $ | 77,235 | $ | 87,746 | $ | 92,377 | $ | 107,062 | $ | 121,218 | 81,634 | |||||||||
Preferred Stock Dividends | ||||||||||||||||||||
Preferred Dividend Requirements | $ | 12,077 | $ | 16,711 | $ | 8,484 | $ | 2,050 | $ | 10,117 | 9,505 | |||||||||
Ratio of income before provision for taxes to Net Income (b) | N/A | 1.05 | N/A | 1.66 | 1.67 | 1.61 | ||||||||||||||
Subtotal—Preferred Dividends | $ | 12,077 | $ | 17,597 | $ | 8,484 | $ | 3,411 | $ | 16,861 | 15,331 | |||||||||
Combined Fixed Charges and Preferred Dividends | $ | 89,312 | $ | 105,343 | $ | 100,861 | $ | 110,473 | $ | 138,079 | 96,965 | |||||||||
Ratio of Earnings to Fixed Charges | — | 1.4 | 3.1 | 5.1 | 1.5 | 4.0 | ||||||||||||||
Insufficient coverage | $ | 914,750 | $ | — | $ | — | $ | — | $ | — | — | |||||||||
Ratio of Earnings to Combined Fixed Charges and Preferred Dividends | — | 1.1 | 2.8 | 4.9 | 1.3 | 3.3 | ||||||||||||||
Insufficient coverage | $ | 926,827 | $ | — | $ | — | $ | — | $ | — | — |
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Exhibit 12
CHESAPEAKE ENERGY CORPORATION
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
(dollars in 000's)
Year Ended Dec. 31, 1998 | Year Ended Dec. 31, 1999 | Year Ended Dec. 31, 2000 | Year Ended Dec. 31, 2001 | Year Ended Dec. 31, 2002 | Six Months Ended June 30, 2003 | ||||||||
RATIO OF EBITDA TO INT. EXP | |||||||||||||
EBITDA | 183,449 | 218,936 | 391,190 | 619,933 | 521,463 | 465,354 | |||||||
Interest expense | 68,249 | 81,052 | 86,256 | 98,321 | 111,280 | 72,800 | |||||||
Ratio | 2.7 | 2.7 | 4.5 | 6.3 | 4.7 | 6.4 | |||||||
RATIO OF EBITDA TO INT. EXP plus DIVIDENDS | |||||||||||||
EBITDA | 183,449 | 218,936 | 391,190 | 619,933 | 521,463 | 465,354 | |||||||
Dividends on preferred stock | 12,077 | 16,711 | 8,484 | 2,050 | 10,117 | 9,505 | |||||||
Interest expense | 68,249 | 81,052 | 86,256 | 98,321 | 111,280 | 72,800 | |||||||
Ratio | 2.3 | 2.2 | 4.1 | 6.2 | 4.3 | 5.7 | |||||||
Financial Results—Non Guarantors | |||||||||||||
Income from Continuing Ops. | (5,964 | ) | 5,565 | 5,189 | 3,440 | 1,412 | 2,491 | ||||||
Interest | 382 | 96 | 35 | 2 | 10 | — | |||||||
Writedown of oil and gas properties | 8,000 | — | — | — | — | — | |||||||
DD&A | 126 | 475 | 181 | 80 | 1,820 | 1,120 | |||||||
EBITDA | 2,544 | 6,136 | 5,405 | 3,522 | 3,242 | 3,611 | |||||||
PRO FORMA FINANCIAL DATA—ratio of ebitda to interest expense (Restr. Subs. Only) | |||||||||||||
EBITDA | 180,905 | 212,800 | 385,785 | 616,411 | 518,221 | 461,743 | |||||||
Interest expense—actual | 67,867 | 80,956 | 86,221 | 98,319 | 111,270 | 72,800 | |||||||
Interest expense—new issue | — | — | — | — | — | — | |||||||
Ratio | 2.7 | 2.6 | 4.5 | 6.3 | 4.7 | 6.3 | |||||||
PRO FORMA FINANCIAL DATA—ratio of ebitda to interest expense and dividends (Restr. Subs. Only) | |||||||||||||
EBITDA | 180,905 | 212,800 | 385,785 | 616,411 | 518,221 | 461,743 | |||||||
Interest expense—actual | 67,867 | 80,956 | 86,221 | 98,319 | 111,270 | 72,800 | |||||||
Interest expense—new issue | |||||||||||||
Preferred Stock Dividend | 12,077 | 16,711 | 8,484 | 2,050 | 10,117 | 9,505 | |||||||
Total interest expense and preferred stock div | 79,944 | 97,667 | 94,705 | 100,369 | 121,387 | 82,305 | |||||||
Ratio | 2.3 | 2.2 | 4.1 | 6.1 | 4.3 | 5.6 |
(a) | Bond discount excluded since its included in interest expense |
(b) | Represents income (loss) before income taxes and extraordinary item divided by income (loss) before extraordinary item, which adjusts dividends on preferred stock to a pre-tax basis. |
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