EXHIBIT 12.1 - COMPUTATION OF RATIO OF DEBT TO ADJUSTED EBITDA
CONTINENTAL RESOURCES, INC.
PRO FORMA PRO FORMA
YEAR ENDED SIX MONTHS SIX MONTHS
YEAR ENDED DECEMBER 31, DECEMBER 31 ENDED JUNE 30, ENDED JUNE 30,
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1993 1994 1995 1996 1997 1997 1997 1998 1998
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NET INCOME 5,772 2,875 3,869 13,325 26,197 20,007 16,330 (3,499) (6,705)
INCOME TAXES 2,974 1,596 2,252 8,238 (8,941) (8,941) (8,941) 0 0
INTEREST EXPENSE 314 670 2,396 4,550 4,804 15,684 2,313 5,174 7,836
AMORTIZATION OF OFFERING COSTS 460 427
DD&A 4,816 6,068 9,614 22,876 33,354 34,931 16,713 16,483 17,508
EXPLORATION EXPENSE 1,996 6,338 6,184 4,513 6,807 6,806 3,410 2,650 2,650
LITIGATION SETTLEMENT (4,000) (7,500) (7,500)
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ADJUSTED EBITDA(1) 11,872 17,547 24,315 53,502 54,721 61,447 29,825 20,808 21,716
TOTAL DEBT 7,514 6,272 44,265 54,759 79,632 153,957
TOTAL DEBT TO ADJUSTED EBITDA 0.6 0.4 1.8 1 1.5 2.5 N/A N/A N/A
(1) Adjusted EBITDA represents earnings before interest expense, income
taxes, depreciation, depletion, amortization and exploration expense,
excluding proceeds from the 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's
ability to meet future debt service requirements, if any.