EXHIBIT 12
CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES
AND PREFERRED DIVIDENDS
| Year Ended December 31, | |||||||||||||||||||||
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
| ($ in millions) | |||||||||||||||||||||
EARNINGS: | |||||||||||||||||||||
Income (loss) before income taxes and cumulative effect of accounting change | $ | 805 | $ | 1,492 | $ | 3,241 | $ | 2,347 | $ | 991 | $ | (9,288 | ) | ||||||||
Interest expense(a) | 162 | 223 | 318 | 375 | 225 | 237 | |||||||||||||||
(Gain)/loss on investment in equity investees in excess of distributed earnings | (1 | ) | 1 | (3 | ) | 21 | 40 | 39 | |||||||||||||
Amortization of capitalized interest | 5 | 10 | 19 | 40 | 74 | 150 | |||||||||||||||
Loan cost amortization | 6 | 9 | 13 | 16 | 19 | 26 | |||||||||||||||
Earnings | $ | 977 | $ | 1,735 | $ | 3,588 | $ | 2,799 | $ | 1,349 | $ | (8,836 | ) | ||||||||
FIXED CHARGES: | |||||||||||||||||||||
Interest Expense | $ | 162 | $ | 223 | $ | 318 | $ | 375 | $ | 225 | $ | 237 | |||||||||
Capitalized interest | 36 | 79 | 179 | 311 | 586 | 627 | |||||||||||||||
Loan cost amortization | 6 | 9 | 13 | 16 | 19 | 26 | |||||||||||||||
Fixed Charges | $ | 204 | $ | 311 | $ | 510 | $ | 702 | $ | 830 | $ | 890 | |||||||||
PREFERRED STOCK DIVIDENDS: | |||||||||||||||||||||
Preferred dividend requirements | $ | 40 | $ | 42 | $ | 89 | $ | 94 | $ | 33 | $ | 23 | |||||||||
Ratio of income before provision for taxes to net income(b) | 1.56 | 1.57 | 1.63 | 1.62 | 1.64 | 1.59 | |||||||||||||||
Preferred Dividends | $ | 62 | $ | 66 | $ | 145 | $ | 152 | $ | 54 | $ | 37 | |||||||||
COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS | $ | 266 | $ | 377 | $ | 655 | $ | 854 | $ | 884 | $ | 927 | �� | ||||||||
RATIO OF EARNINGS TO FIXED CHARGES | 4.8 | 5.6 | 7.0 | 4.0 | 1.6 | (9.9 | ) | ||||||||||||||
INSUFFICIENT COVERAGE | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 9,726 | |||||||||
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS | 3.7 | 4.6 | 5.5 | 3.3 | 1.5 | (9.5 | ) | ||||||||||||||
INSUFFICIENT COVERAGE | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 9,763 | |||||||||
| (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. |