Chesapeake Energy (CHK) 10-K 2010 FY Annual report

EXHIBIT 12

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES

AND PREFERRED DIVIDENDS

	Year Ended December 31,
	2005		2006			2007		2008		2009			2010
	($ in millions)
EARNINGS:
Income (loss) before income taxes and cumulative effect of accounting change	$	1,492	$	3,241		$	2,347	$	991	$	(9,288	)	$	2,884
Interest expense(a)		223		318			375		225		237			122
(Gain)/loss on investment in equity investees in excess of distributed earnings		1		(3	)		21		40		39			(232	)
Amortization of capitalized interest		10		19			40		74		150			212
Loan cost amortization		9		13			16		19		26			25
Earnings	$	1,735	$	3,588		$	2,799	$	1,349	$	(8,836	)	$	3,011
FIXED CHARGES:
Interest Expense	$	223	$	318		$	375	$	225	$	237		$	122
Capitalized interest		79		179			311		586		627			711
Loan cost amortization		9		13			16		19		26			25
Fixed Charges	$	311	$	510		$	702	$	830	$	890		$	858
PREFERRED STOCK DIVIDENDS:
Preferred dividend requirements	$	42	$	89		$	94	$	33	$	23		$	111
Ratio of income before provision for taxes to net income(b)		1.57		1.63			1.62		1.64		1.59			1.63
Preferred Dividends	$	66	$	145		$	152	$	54	$	37		$	181
COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS	$	377	$	655		$	854	$	884	$	927		$	1,039
RATIO OF EARNINGS TO FIXED CHARGES		5.6		7.0			4.0		1.6		(9.9	)		3.5
INSUFFICIENT COVERAGE	$	—	$	—		$	—	$	—	$	9,726		$	—
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS		4.6		5.5			3.3		1.5		(9.5	)		2.9
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.