EXHIBIT 12
CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES
AND PREFERRED DIVIDENDS
Years Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
EARNINGS: | ||||||||||||||||||||||||
Income (loss) before income taxes and cumulative effect of accounting change | $ | 3,241 | $ | 2,347 | $ | 991 | $ | (9,288 | ) | $ | 2,884 | $ | (266 | ) | ||||||||||
Interest expense(a) | 318 | 375 | 225 | 237 | 122 | 15 | ||||||||||||||||||
(Gain)/loss on investment in equity investees in excess of distributed earnings | (3 | ) | 21 | 40 | 39 | (232 | ) | (25 | ) | |||||||||||||||
Amortization of capitalized interest | 19 | 40 | 74 | 150 | 212 | 62 | ||||||||||||||||||
Loan cost amortization | 13 | 16 | 19 | 26 | 25 | 7 | ||||||||||||||||||
Earnings | $ | 3,588 | $ | 2,799 | $ | 1,349 | $ | (8,836 | ) | $ | 3,011 | $ | (207 | ) | ||||||||||
FIXED CHARGES: | ||||||||||||||||||||||||
Interest Expense | $ | 318 | $ | 375 | $ | 225 | $ | 237 | $ | 122 | $ | 15 | ||||||||||||
Capitalized interest | 179 | 311 | 586 | 627 | 711 | 203 | ||||||||||||||||||
Loan cost amortization | 13 | 16 | 19 | 26 | 25 | 7 | ||||||||||||||||||
Fixed Charges | $ | 510 | $ | 702 | $ | 830 | $ | 890 | $ | 858 | $ | 225 | ||||||||||||
PREFERRED STOCK DIVIDENDS: | ||||||||||||||||||||||||
Preferred dividend requirements | $ | 89 | $ | 94 | $ | 33 | $ | 23 | $ | 111 | $ | 43 | ||||||||||||
Ratio of income before provision for taxes to net | 1.63 | 1.62 | 1.64 | 1.59 | 1.63 | 1.64 | ||||||||||||||||||
Preferred Dividends | $ | 145 | $ | 152 | $ | 54 | $ | 37 | $ | 181 | $ | 70 | ||||||||||||
COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS | $ | 655 | $ | 854 | $ | 884 | $ | 927 | $ | 1,039 | $ | 295 | ||||||||||||
RATIO OF EARNINGS TO FIXED CHARGES | 7.0 | 4.0 | 1.6 | (9.9 | ) | 3.5 | (0.9 | ) | ||||||||||||||||
INSUFFICIENT COVERAGE | $ | — | $ | — | $ | — | $ | 9,726 | $ | — | $ | 432 | ||||||||||||
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS | 5.5 | 3.3 | 1.5 | (9.5 | ) | 2.9 | (0.7 | ) | ||||||||||||||||
INSUFFICIENT COVERAGE | $ | — | $ | — | $ | — | $ | 9,763 | $ | — | $ | 502 |
(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. |