EX-12 5 dex12.htm RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS Ratios of Earnings to Fixed Charges and Preferred Dividends

EXHIBIT 12

CHESAPEAKE ENERGY CORPORATION

RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS

($ in millions)

 

     Year
Ended
December 31,
2004		     Year
Ended
December 31,
2005		    Year
Ended
December 31,
2006		     Year
Ended
December 31,
2007		    Year
Ended
December 31,
2008		    Three Months
Ended
March 31,
2009		  

EARNINGS:

                

Income (loss) before income taxes and Cumulative effect of accounting change

    $ 805     $ 1,492    $ 3,241     $ 2,347    $ 991    $ (9,184 )

Interest expense (a)

      162       223      318       375      225      42  

(Gain)/loss on investment in equity investees in excess of distributed earnings

      (1 )     1      (3 )     21      40      1  

Amortization of capitalized interest

      5       10      19       40      74      36  

Loan cost amortization

      6       9      13       16      19      6  
                                             

Earnings

    $ 977     $ 1,735    $ 3,588     $ 2,799    $ 1,349    $ (9,099 )
                                             

FIXED CHARGES:

                

Interest expense

    $ 162     $ 223    $ 318     $ 375    $ 225    $ 42  

Capitalized interest

      36       79      179       311      586      161  

Loan cost amortization

      6       9      13       16      19      6  
                                             

Fixed Charges

    $ 204     $ 311    $ 510     $ 702    $ 830    $ 209  
                                             

Preferred Stock Dividends

                

Preferred Dividend Requirements

    $ 40     $ 42    $ 89     $ 94    $ 33    $ 6  

Ratio of income before provision for taxes to net income (b)

      1.56       1.57      1.63       1.62      1.64      1.60  
                                             

Subtotal – Preferred Dividends

    $ 62     $ 66    $ 145     $ 152    $ 54    $ 10  

Combined Fixed Charges and Preferred Dividends

    $ 266     $ 377    $ 655     $ 854    $ 884    $ 219  

Ratio of Earnings to Fixed Charges

      4.8       5.6      7.0       4.0      1.6      (43.6 )

Insufficient coverage

    $ —     $ —    $ —     $ —    $ —    $ 9,308  

Ratio of Earnings to Combined Fixed Charges and Preferred Dividends

      3.7       4.6      5.5       3.3      1.5      (41.6 )

Insufficient coverage

    $ —     $ —    $ —     $ —    $ —    $ 9,318  

 

(a)

Excludes the effect of unrealized gains or losses on interest rate derivatives and includes amortization of bond discount.

 

(b)

Amounts of income before provision for taxes and of net income exclude the cumulative effect of accounting change.