EX-12.1 2 h51325exv12w1.htm STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES exv12w1
 

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)
                                                         
    Nine Months Ended                                
    September 30,                                
    2007     2006     2006     2005     2004     2003     2002  
EARNINGS
                                                        
Pretax income from continuing operations before preferred interests of subsidiaries
   $ 3,126,965     $ 3,233,276     $ 4,009,595     $ 4,206,254     $ 2,663,083     $ 1,930,925     $ 915,194  
Add: Fixed charges excluding capitalized interest and preferred interest requirements of consolidated subsidiaries
     192,712       123,983       178,399       138,399       134,797       132,820       128,730  
 
                                          
 
                                                        
Adjusted Earnings
   $ 3,319,677     $ 3,357,259     $ 4,187,994     $ 4,344,653     $ 2,797,880     $ 2,063,745     $ 1,043,924  
 
                                          
 
                                                        
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
                                                        
Interest expense including capitalized interest (1,5)
   $ 230,487     $ 154,073     $ 217,454     $ 175,419     $ 168,090     $ 173,045     $ 155,667  
Amortization of debt expense
     2,421       1,530       2,048       3,748       2,471       2,163       1,859  
Interest component of lease rental expenditures (2)
     16,358       14,563       20,198       16,220       14,984       14,458       11,895  
Preferred interest requirements of consolidated subsidiaries (3)
     —       —       —       —       —       11,805       19,581  
 
                                          
 
                                                        
Fixed charges
     249,266       170,166       239,700       195,387       185,545       201,471       189,002  
Preferred stock dividend requirements (4)
     7,656       6,780       8,922       9,105       9,058       9,968       17,540  
 
                                          
 
                                                        
Combined Fixed Charges and Preferred Stock Dividends
   $ 256,922     $ 176,946     $ 248,622     $ 204,492     $ 194,603     $ 211,439     $ 206,542  
 
                                          
 
                                                        
Ratio of Earnings to Fixed Charges
     13.32       19.73       17.47       22.24       15.08       10.24       5.52  
 
                                          
 
                                                        
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
     12.92       18.97       16.84       21.25       14.38       9.76       5.05  
 
                                          
 
(1)   The company did 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 was 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 to rental payments for all periods presented.
 
(3)   The company did not receive a tax benefit for a portion of its preferred interests of consolidated subsidiaries. This amount represents the pre-tax earnings that would be required to cover preferred interests requirements of consolidated subsidiaries. In September 2003, the company retired its preferred interests of subsidiaries.
 
(4)   The company does not receive a tax benefit for its preferred stock dividends. This amount represents the pre-tax earnings that would be required to cover its preferred stock dividends.
 
(5)   Interest expense related to the provisions of Financial Accounting Standards Board Interpretation No. 48 (FIN 48) “Accounting for Uncertainty in Income Taxes” is not included in the computation of ratios of earnings to fixed charges and combined fixed charges and preferred stock dividends.