Exhibit 12
CHESAPEAKE ENERGY CORPORATION
RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
($ in millions)
Year Ended December 31, 2004 | Year Ended December 31, 2005 | Year Ended December 31, 2006 | Year Ended December 31, 2007 | Year Ended December 31, 2008 | |||||||||||||
EARNINGS: | |||||||||||||||||
Income (loss) before income taxes and Cumulative effect of accounting change | $ | 805 | $ | 1,493 | $ | 3,255 | $ | 2,341 | $ | 1,186 | |||||||
Interest expense (a) | 162 | 221 | 299 | 379 | 268 | ||||||||||||
(Gain)/loss on investment in equity investees in excess of distributed earnings | (1 | ) | 1 | (3 | ) | 21 | 40 | ||||||||||
Amortization of capitalized interest | 5 | 10 | 19 | 39 | 66 | ||||||||||||
Loan cost amortization | 6 | 9 | 13 | 17 | 21 | ||||||||||||
Earnings | $ | 977 | $ | 1,734 | $ | 3,583 | $ | 2,797 | $ | 1,581 | |||||||
FIXED CHARGES: | |||||||||||||||||
Interest expense | $ | 162 | $ | 221 | $ | 299 | $ | 379 | $ | 268 | |||||||
Capitalized interest | 36 | 79 | 179 | 269 | 465 | ||||||||||||
Loan cost amortization | 6 | 9 | 13 | 17 | 21 | ||||||||||||
Fixed Charges | $ | 204 | $ | 309 | $ | 491 | $ | 665 | $ | 754 | |||||||
Preferred Stock Dividends | |||||||||||||||||
Preferred Dividend Requirements | $ | 40 | $ | 42 | $ | 89 | $ | 94 | $ | 33 | |||||||
Ratio of income before provision for taxes to net income (b) | 1.56 | 1.57 | 1.62 | 1.61 | 1.64 | ||||||||||||
Subtotal – Preferred Dividends | $ | 62 | $ | 66 | $ | 144 | $ | 151 | $ | 54 | |||||||
Combined Fixed Charges and Preferred Dividends | $ | 266 | $ | 375 | $ | 635 | $ | 816 | $ | 808 | |||||||
Ratio of Earnings to Fixed Charges | 4.8 | 5.6 | 7.3 | 4.2 | 2.1 | ||||||||||||
Insufficient coverage | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||
Ratio of Earnings to Combined Fixed Charges and Preferred Dividends | 3.7 | 4.6 | 5.6 | �� | 3.4 | 2.0 | |||||||||||
Insufficient coverage | $ | — | $ | — | $ | — | $ | — | $ | — |
(a) | Excludes the effect of unrealized gains or losses on interest rate derivatives and includes amortization of bond discount. |
(b) | Amounts of income before provision for taxes and of net income exclude the cumulative effect of accounting change. |