EX-12.1 3 d308781dex121.htm EX-12.1 EX-12.1

Exhibit 12.1

CONCHO RESOURCES INC.

STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND

EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

 

     Six
Months
Ended
June 30,
2017		     

 

Years Ended December 31,

  

(in millions, except ratios)

       2016      2015      2014      2013      2012  

Income (loss) from continuing operations before income taxes

    $ 1,266      $ (2,339 )     $ 97      $ 856      $ 357      $ 659  

Interest expense

      79        204        215        217        219        183  

Rental expense attributable to interest

      2        3        3        2        2        2  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Earnings

    $ 1,347      $ (2,132 )     $ 315      $ 1,075      $ 578      $ 844  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Interest expense

    $ 79      $ 204      $ 215      $ 217      $ 219      $ 183  

Capitalized interest

      —          —          5        2        —          —    

Rental expense attributable to interest

      2        3        3        2        2        2  

Preferred stock dividends

      —          —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Fixed charges and preferred stock dividends

    $ 81      $ 207      $ 223      $ 221      $ 221      $ 185  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Ratio of earnings to fixed charges(a)

      16.63        (b)        1.41        4.86        2.62        4.58  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Ratio of earnings to fixed charges and preferred stock dividends(c)

      16.63        (b)        1.41        4.86        2.62        4.58  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

(a) The ratio has been computed by dividing earnings by fixed charges. For purposes of computing the ratio:

 

  •   earnings include income (loss) from continuing operations before income taxes, adjusted for interest expense and the portion of rental expense deemed to be representative of the interest component of rental expense; and

 

  •   fixed charges consist of interest expense, capitalized interest and the portion of rental expense deemed to be representative of the interest component of rental expense.

 

(b) Due to our loss from operations before income taxes for the year ended December 31, 2016, the ratio coverage was less than 1:1. To achieve ratio coverage of 1:1, we would have needed additional earnings of approximately $2.3 billion.
(c) The ratio has been computed by dividing earnings by fixed charges and preferred stock dividends. For purposes of computing the ratio:

 

  •   earnings include income (loss) from continuing operations before income taxes, adjusted for interest expense and the portion of rental expense deemed to be representative of the interest component of rental expense; and

 

  •   fixed charges and preferred stock dividends consist of interest expense, capitalized interest, the portion of rental expense deemed to be representative of the interest component of rental expense and preferred stock dividends.