Exhibit 12
CHESAPEAKE ENERGY CORPORATION
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
(dollars in 000’s)
Year Ended December 31, 1999 | Year Ended December 31, 2000 | Year Ended December 31, 2001 | Year Ended December 31, 2002 | Year Ended December 31, 2003 | Nine Months Ended September 30, 2004 | ||||||||||||||
EARNINGS: | |||||||||||||||||||
Income before income taxes and cumulative effect of accounting change | $ | 35,030 | $ | 196,162 | $ | 361,698 | $ | 67,140 | $ | 500,952 | $ | 479,087 | |||||||
Interest expense (a) | 81,052 | 86,256 | 98,321 | 111,280 | 147,817 | 118,151 | |||||||||||||
(Gain)/loss on investment in equity investees in excess of distributed earnings | — | — | — | — | 409 | (583 | ) | ||||||||||||
Amortization of capitalized interest | 1,047 | 1,226 | 1,784 | 1,804 | 2,519 | 3,119 | |||||||||||||
Bond discount amortization (b) | — | — | — | — | — | — | |||||||||||||
Loan cost amortization | 3,338 | 3,669 | 4,022 | 4,962 | 4,254 | 3,987 | |||||||||||||
Earnings | $ | 120,467 | $ | 287,313 | $ | 465,825 | $ | 185,186 | $ | 655,951 | $ | 603,761 | |||||||
FIXED CHARGES: | |||||||||||||||||||
Interest expense | $ | 81,052 | $ | 86,256 | $ | 98,321 | $ | 111,280 | $ | 147,817 | $ | 118,151 | |||||||
Capitalized interest | 3,356 | 2,452 | 4,719 | 4,976 | 13,041 | 23,186 | |||||||||||||
Bond discount amortization (b) | — | — | — | — | — | — | |||||||||||||
Loan cost amortization | 3,338 | 3,669 | 4,022 | 4,962 | 4,254 | 3,987 | |||||||||||||
Fixed Charges | $ | 87,746 | $ | 92,377 | $ | 107,062 | $ | 121,218 | $ | 165,112 | $ | 145,324 | |||||||
Preferred Stock Dividends | |||||||||||||||||||
Preferred Dividend Requirements | $ | 16,711 | $ | 8,484 | $ | 2,050 | $ | 10,117 | $ | 22,469 | $ | 30,799 | |||||||
Ratio of income before provision for taxes to net income (c) | 1.05 | N/A | 1.66 | 1.67 | 1.61 | 1.56 | |||||||||||||
Subtotal – Preferred Dividends | $ | 17,597 | $ | 8,484 | $ | 3,411 | $ | 16,861 | $ | 36,240 | $ | 48,046 | |||||||
Combined Fixed Charges and Preferred Dividends | $ | 105,343 | $ | 100,861 | $ | 110,473 | $ | 138,079 | $ | 201,352 | $ | 193,370 | |||||||
Ratio of Earnings to Fixed Charges | 1.4 | 3.1 | 4.4 | 1.5 | 4.0 | 4.2 | |||||||||||||
Insufficient coverage | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||
Ratio of Earnings to Combined Fixed Charges and Preferred Dividends | 1.1 | 2.8 | 4.2 | 1.3 | 3.3 | 3.1 | |||||||||||||
Insufficient coverage | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
(a) | Excludes the effect on unrealized gains or losses on interest rate derivatives. |
(b) | Amortization of bond discount is excluded since it is included in interest expense. |
(c) | Amounts of income before provision for taxes and of net income exclude the cumulative effect of accounting change. |