EX-12 4 ye2015exhibit12.htm RATIO OF EARNINGS TO FIXED CHARGES Exhibit


 
 
 
EXHIBIT 12
CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES
COMPUTATION OF TOTAL ENTERPRISE RATIOS OF EARNINGS TO FIXED CHARGES
(Amounts in millions, except ratios)
 
The following table sets forth our historical ratios of earnings to fixed charges for the periods indicated. You should read these ratios of earnings to fixed charges in connection with our consolidated and combined financial statements, including the notes to those statements.
 
 
Year Ended December 31,
 
 
2015

2014

 
2013

 
2012

 
2011

 
2010

Income / (loss) before income taxes(a)
 
$
(5,476
)
$
(2,421
)
 
$
1,447

 
$
1,181

 
$
1,641

 
$
1,129

Add:
 
 
 
 
 
 
 
 
 
 
 
Interest expense and amortization of debt issuance costs and deferred gain
 
326

72

 
—

 
—

 
—

 
—

Portion of lease rentals representative of the interest factor
 
4

3

 
4

 
4

 
3

 
3

Earnings before fixed charges
 
$
(5,146
)
$
(2,346
)
 
$
1,451

 
$
1,185

 
$
1,644

 
$
1,132

 
 
 
 
 
 
 
 
 
 
 
 
Fixed charges:
 
 
 
 
 
 
 
 
 
 
 
Interest expense and amortization of debt issuance costs and deferred gain, including capitalized interest
 
$
335

$
76

 
$
—

 
$
—

 
$
—

 
$
—

Portion of lease rentals representative of the interest factor
 
4

3

 
4

 
4

 
3

 
3

Total fixed charges
 
$
339

$
79

 
$
4

 
$
4

 
$
3

 
$
3

 
 
 
 
 
 
 
 
 
 
 
 
Ratio of earnings to fixed charges(b)
 
n/a

n/a

 
363

 
296

 
548

 
377

 
 
 
 
 
 
 
 
 
 
 
 
Insufficient coverage
 
$
5,485

$
2,425

 
$
—

 
$
—

 
$
—

 
$
—

Note: Had we been a stand-alone company for the full year 2014, and had the same level of debt throughout the year as we did on December 31, 2014, of approximately $6.4 billion, we would have incurred $314 million of pre-tax interest expense, on a pro-forma basis, for the year ended December 31, 2014, compared to the $72 million pre-tax interest expense reported on our statement of operations for the year then ended. Therefore, the insufficient coverage on a pro-forma basis would have been approximately $2,437 million.
(a)
The 2015 amount includes non-cash charges consisting of $4.9 billion of asset impairments, $71 million of write-down of certain assets, $67 million of early retirement and severance costs, $11 million of rig termination and other costs, and $8 million of debt transactions costs, partially offset by $52 million in hedge related gains. Excluding these items, our income/(loss) before income taxes for the year ended December 31, 2015 would have been approximately $(519) million. Therefore, the insufficient coverage would have been approximately $858 million. The 2014 amount includes non-cash charges consisting of $3.4 billion of asset impairments, $52 million of rig termination and other price-related costs, and $55 million of Spin-off and transition related costs. Excluding these items, our income before income taxes for the year ended December 31, 2014 would have been approximately $1.1 billion, and the ratio of earnings to fixed charges would have been 14.
 
(b)
The 2014 ratio takes into consideration interest on the debt associated with the Spin-off which we entered into during the last half of 2014.