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 | Nine Months Ended September 30, 2009 | ||||||||||||||||
EARNINGS: | |||||||||||||||||||||
Income (loss) before income taxes and Cumulative effect of accounting change | $ | 805 | $ | 1,492 | $ | 3,241 | $ | 2,347 | $ | 991 | $ | (8,490 | ) | ||||||||
Interest expense (a) | 162 | 223 | 318 | 375 | 225 | 191 | |||||||||||||||
(Gain)/loss on investment in equity investees in excess of distributed earnings | (1 | ) | 1 | (3 | ) | 21 | 40 | 32 | |||||||||||||
Amortization of capitalized interest | 5 | 10 | 19 | 40 | 74 | 105 | |||||||||||||||
Loan cost amortization | 6 | 9 | 13 | 16 | 19 | 19 | |||||||||||||||
Earnings | $ | 977 | $ | 1,735 | $ | 3,588 | $ | 2,799 | $ | 1,349 | $ | (8,143 | ) | ||||||||
FIXED CHARGES: | |||||||||||||||||||||
Interest expense | $ | 162 | $ | 223 | $ | 318 | $ | 375 | $ | 225 | $ | 191 | |||||||||
Capitalized interest | 36 | 79 | 179 | 311 | 586 | 464 | |||||||||||||||
Loan cost amortization | 6 | 9 | 13 | 16 | 19 | 19 | |||||||||||||||
Fixed Charges | $ | 204 | $ | 311 | $ | 510 | $ | 702 | $ | 830 | $ | 674 | |||||||||
Preferred Stock Dividends | |||||||||||||||||||||
Preferred Dividend Requirements | $ | 40 | $ | 42 | $ | 89 | $ | 94 | $ | 33 | $ | 18 | |||||||||
Ratio of income before provision for taxes to net income (b) | 1.56 | 1.57 | 1.63 | 1.62 | 1.64 | 1.60 | |||||||||||||||
Subtotal – Preferred Dividends | $ | 62 | $ | 66 | $ | 145 | $ | 152 | $ | 54 | $ | 29 | |||||||||
Combined Fixed Charges and Preferred Dividends | $ | 266 | $ | 377 | $ | 655 | $ | 854 | $ | 884 | $ | 703 | |||||||||
Ratio of Earnings to Fixed Charges | 4.8 | 5.6 | 7.0 | 4.0 | 1.6 | (12.1 | ) | ||||||||||||||
Insufficient coverage | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 8,817 | |||||||||
Ratio of Earnings to Combined Fixed Charges and Preferred Dividends | 3.7 | 4.6 | 5.5 | 3.3 | 1.5 | (11.6 | ) | ||||||||||||||
Insufficient coverage | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 8,846 | |||||||||
| (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. |