Continental Resources, Inc.
Exhibit 12.1 - COMPUTATION OF RATIO OF DEBT TO ADJUSTED EBITDA
Nine months
ended
YEAR ENDED DECEMBER 31, September 30,
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1999 2000 2001 2002 2003 2004
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NET INCOME (LOSS) 3,920 37,780 11,667 (20,032) 2,340 18,667
INCOME TAXES - - - - - -
INTEREST EXPENSE 17,370 16,514 15,674 18,401 20,258 16,152
DD&A 19,549 19,552 27,731 31,380 42,367 30,329
ACCRETION EXPENSE - - - - 1,151 788
PROPERTY IMPAIRMENTS 5,154 5,631 10,113 25,686 8,975 9,062
EXPLORATION EXPENSE 3,191 9,965 15,863 10,229 17,221 9,278
LITIGATION SETTLEMENT - - - - - -
CHANGE IN ACCOUNTING PRINCIPLE - - - - (2,162) -
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ADJUSTED EBITDA <F1> 49,184 89,442 81,048 65,664 90,150 84,276
ANNUALIZED ADJUSTED EBITDA 112,368
TOTAL DEBT <F2> 170,637 140,350 183,395 235,205 277,093 281,583
TOTAL DEBT TO ADJUSTED EBITDA 3.5 1.6 2.3 3.6 3.1 2.5
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<FN>
<F1>
Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, depletion,
amortization, accretion, property impairments and exploration expense, excluding proceeds from
litigation settlements. Adjusted EBITDA is not a measure of cash flow as determined by generally
accepted accounting principles ("GAAP"). Adjusted EBITDA should not be considered as an alternative
to, or more meaningful than, net income or cash flow as determined in accordance with GAAP or as an
indicator of a company's operating performance or liquidity. Certain items excluded from Adjusted
EBITDA are significant components in understanding and assessing a company's financial performance,
such as a company's cost of capital and tax structure, as well as historic costs of depreciable
assets, none of which are components of Adjusted EBITDA. The Company's computations of Adjusted
EBITDA may not be comparable to other similarly titled measures of other companies. The Company
believes that Adjusted EBITDA is a widely followed measure of operating performance and may also be
used by investors to measure the Company' ability to meet future debt service requirements, if any.
<F2>
Total debt excludes capital leases of $11.3 million in the nine months ended September 30, 2004,
$13.8 million at year-end 2003 and $12.0 million at year-end 2002.
</FN>