EX-12 2 chk-ex_12x20170331x10q.htm RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES

10-Q |  | EXHIBIT 12

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES
AND PREFERRED DIVIDENDS

|  | Years Ended December 31, |  | Three Months Ended March 31,
|  | 2012 |  | 2013 |  | 2014 |  | 2015 |  | 2016 |  | 2017
EARNINGS (LOSS): |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) before income taxes and cumulative effect of accounting change |  | $ | (974 | ) |  | $ | 1,442 |  |  | $ | 3,200 |  |  | $ | (19,098 | ) |  | $ | (4,589 | ) |  | $ | 141 |
Interest expense(a) |  | 142 |  |  | 207 |  |  | 172 |  |  | 322 |  |  | 275 |  |  | 94 |
(Gain)/loss on investment in equity investees in excess of distributed earnings |  | 108 |  |  | 219 |  |  | 75 |  |  | 96 |  |  | 8 |  |  | — |
Amortization of capitalized interest |  | 402 |  |  | 440 |  |  | 438 |  |  | 483 |  |  | 729 |  |  | 126 |
Loan cost amortization |  | 43 |  |  | 37 |  |  | 32 |  |  | 31 |  |  | 24 |  |  | 7 |
Earnings (Loss) |  | $ | (279 | ) |  | $ | 2,345 |  |  | $ | 3,917 |  |  | $ | (18,166 | ) |  | $ | (3,553 | ) |  | $ | 368 |
FIXED CHARGES: |  |  |  |  |  |  |  |  |  |  |  |
Interest Expense |  | $ | 142 |  |  | $ | 207 |  |  | $ | 172 |  |  | $ | 322 |  |  | $ | 275 |  |  | $ | 94 |
Capitalized interest |  | 976 |  |  | 815 |  |  | 604 |  |  | 410 |  |  | 242 |  |  | 51 |
Loan cost amortization |  | 43 |  |  | 37 |  |  | 32 |  |  | 31 |  |  | 24 |  |  | 7 |
Fixed Charges |  | $ | 1,161 |  |  | $ | 1,059 |  |  | $ | 808 |  |  | $ | 763 |  |  | $ | 541 |  |  | $ | 152 |
PREFERRED STOCK DIVIDENDS: |  |  |  |  |  |  |  |  |  |  |  |
Preferred dividend requirements |  | $ | 171 |  |  | $ | 171 |  |  | $ | 171 |  |  | $ | 171 |  |  | $ | 97 |  |  | $ | 23 |
Ratio of income (loss) before provision for taxes to net income (loss)(b) |  | 1.64 |  |  | 1.61 |  |  | 1.56 |  |  | 1.30 |  |  | 1.04 |  |  | 1.01 |
Preferred Dividends |  | $ | 280 |  |  | $ | 275 |  |  | $ | 266 |  |  | $ | 222 |  |  | $ | 101 |  |  | $ | 23 |
COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS |  | $ | 1,441 |  |  | $ | 1,334 |  |  | $ | 1,074 |  |  | $ | 985 |  |  | $ | 642 |  |  | $ | 175 |
RATIO OF EARNINGS TO FIXED CHARGES |  | (0.2 | ) |  | 2.2 |  |  | 4.8 |  |  | (23.8 | ) |  | (6.6 | ) |  | 2.4 |
INSUFFICIENT COVERAGE |  | $ | 1,440 |  |  | $ | — |  |  | $ | — |  |  | $ | 18,929 |  |  | $ | 4,094 |  |  | $ | — |
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS |  | (0.2 | ) |  | 1.8 |  |  | 3.6 |  |  | (18.4 | ) |  | (5.5 | ) |  | 2.1 |
INSUFFICIENT COVERAGE |  | $ | 1,720 |  |  | $ | — |  |  | $ | — |  |  | $ | 19,151 |  |  | $ | 4,195 |  |  | $ | — |

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

(b) | Amounts of income (loss) before provision for taxes and of net income (loss) exclude the cumulative effect of accounting change.