EXHIBIT 12.1
APACHE CORPORATION
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
-----------------------
2004 2003 2003 2002
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EARNINGS
Pretax income from continuing operations before preferred interests of
subsidiaries ..................................................... $1,085,328 $1,000,549 $1,930,925 $ 915,194
Add: Fixed charges excluding capitalized interest and preferred interest
requirements of consolidated subsidiaries ........................ 62,901 61,785 132,820 128,730
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Adjusted Earnings .................................................... $1,148,229 $1,062,334 $2,063,745 $1,043,924
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FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Interest expense including capitalized interest (1) .................. $ 80,742 $ 79,124 $ 173,045 $ 155,667
Amortization of debt expense ......................................... 1,162 1,067 2,163 1,859
Interest component of lease rental expenditures (2) .................. 7,355 5,444 14,458 11,895
Preferred interest requirements of consolidated subsidiaries (3) ..... - 8,404 11,805 19,581
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Fixed charges ........................................................ 89,259 94,039 201,471 189,002
Preferred stock dividend requirements (4) ............................ 4,268 5,071 9,968 17,540
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Combined Fixed Charges and Preferred Stock Dividends ................. $ 93,527 $ 99,110 $ 211,439 $ 206,542
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Ratio of Earnings to Fixed Charges ....................................... 12.86 11.30 10.24 5.52
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Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends 12.28 10.72 9.76 5.05
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2001 2000 1999
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EARNINGS
Pretax income from continuing operations before preferred interests of
subsidiaries ..................................................... $1,206,863 $1,203,681 $ 344,573
Add: Fixed charges excluding capitalized interest and preferred interest
requirements of consolidated subsidiaries ........................ 134,484 116,190 90,398
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Adjusted Earnings .................................................... $1,341,347 $1,319,871 $ 434,971
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FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Interest expense including capitalized interest (1) .................. $ 178,915 $ 168,121 $ 132,986
Amortization of debt expense ......................................... 2,460 2,726 4,854
Interest component of lease rental expenditures (2) .................. 9,858 7,343 5,789
Preferred interest requirements of consolidated subsidiaries (3) ..... 8,608 - -
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Fixed charges ........................................................ 199,841 178,190 143,629
Preferred stock dividend requirements (4) ............................ 32,495 33,386 24,788
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Combined Fixed Charges and Preferred Stock Dividends ................. $ 232,336 $ 211,576 $ 168,417
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Ratio of Earnings to Fixed Charges ....................................... 6.71 7.41 3.03
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Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends 5.77 6.24 2.58
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(1) The Company does not receive a tax benefit for $5 million of
transaction costs written off to interest expense when the Company
retired its preferred interests of subsidiaries in September 2003.
Given the non-deductibility of the charge, $9 million of pre-tax income
is required to cover the $5 million write-off. Accordingly, interest
expense has been grossed up by $4 million.
(2) Represents the portion of rental expense assumed to be attributable to
interest factors of related rental obligations determined at interest
rates appropriate for the period during which the rental obligations
were incurred. Approximately 32 to 34 percent applies for all periods
presented.
(3) The Company does not receive a tax benefit for a portion of its
preferred interests of consolidated subsidiaries. As a result, these
amounts represent the pre-tax earnings that would be required to cover
preferred interests requirements of consolidated subsidiaries.
(4) The Company does not receive a tax benefit for its preferred stock
dividends. As a result, this amount represents the pre-tax earnings
that would be required to cover its preferred stock dividends.