EX-12.1 3 dex121.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Computation of Ratio of Earnings to Fixed Charges

EXHIBIT 12.1

 

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(Dollar Amounts in Thousands)

 

    

Nine Months Ended

September 30,

     Year Ended December 31,
  
     Proforma
2004 (a)
     2004
     2003
     Proforma
2003 (a)
     2003
     2002
     2001
      2000
      1999
  

Net Income

    $ (22,515 )   $ (18,687 )   $ 47,371     $ 31,700     $ 59,411     $ 26,237     $ 53,171      $ 28,749      $ 19,105  

Cumulative effect of accounting change

      —         —         (12,324 )     —         (12,324 )     —         1,522        —          —    

Provision for Income taxes

      (12,942 )     (10,764 )     26,834       22,674       33,452       16,732       34,388        16,765        5,332  

Fixed charges (see below)

      42,065       32,224       19,544       73,038       27,618       21,994       20,707        19,806        18,588  

Interest capitalized

      (9,051 )     (4,872 )     (2,021 )     (13,695 )     (3,232 )     (2,387 )     (3,145 )      (3,818 )      (3,592 )
    
 
 
 
 
 
 
  
  

Total adjusted earnings available for payment of fixed charges

    $ (2,443 )   $ (2,099 )   $ 79,404     $ 113,717     $ 104,925     $ 62,576     $ 106,643      $ 61,502      $ 39,433  
    
 
 
 
 
 
 
  
  

Fixed Charges

                                                                           

Interest expense

    $ 31,568     $ 26,506     $ 17,130     $ 57,096     $ 23,778     $ 19,377     $ 17,411      $ 15,885      $ 14,912  

Interest capitalized

      9,051       4,872       2,021       13,695       3,232       2,387       3,145        3,818        3,592  

Rental expense representative of interest factor

      1,446       846       393       2,247       608       230       151        103        84  
    
 
 
 
 
 
 
  
  

Total fixed charges

    $ 42,065     $ 32,224     $ 19,544     $ 73,038     $ 27,618     $ 21,994     $ 20,707      $ 19,806      $ 18,588  
    
 
 
 
 
 
 
  
  

Ratio of earnings to fixed charges

      (b)       (c)       4.1       1.6       3.8       2.8       5.2        3.1        2.1  
(a) Adjusted to give effect to (1) the acquisition of Nuevo Energy Company effective May 14, 2004; (2) the sale of $250.0 million Series A notes and the application of the net proceeds thereof and borrowings under our credit facility including for the termination of Nuevo’s credit facility and certain other recapitalization transactions; (3) the acquisition of 3TEC Energy Corporation which was completed on June 4, 2003; (4) the issuance of $75.0 million of 8 3/4% notes on May 30, 2003; and (5) the sale of Nuevo’s operations in The Republic of Congo, which was completed on July 30, 2004.

 

(b) Total fixed charges exceed total adjusted earnings available for payment of fixed charges by $44.5 million. Total adjusted earnings available for payment of fixed charges includes a $122.1 million noncash loss on derivatives that do not qualify for hedge accounting. Excluding this noncash loss the ratio of earnings to fixed charges would be 2.8 to 1.0.

 

(c) Total fixed charges exceed total adjusted earnings available for payment of fixed charges by $34.3 million. Total adjusted earnings available for payment of fixed charges includes a $109.5 million noncash loss on derivatives that do not qualify for hedge accounting. Excluding this noncash loss the ratio of earnings to fixed charges would be 3.3 to 1.0.