Exhibit

Unsatisfied
Transaction Price
(in billions)

Weighted Average Recognition Timing (years) (1)

LNG revenues

Regasification revenues

Total revenues

Exhibit 99.1


PART I.	FINANCIAL INFORMATION


ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except unit data)



	March 31,			December 31,
	2018			2017
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	—		$	—
Restricted cash	1,477			1,589
Accounts and other receivables	240			191
Accounts receivable—affiliate	114			163
Advances to affiliate	97			36
Inventory	83			95
Other current assets	54			65
Total current assets	2,065			2,139

Property, plant and equipment, net	15,145			15,139
Debt issuance costs, net	34			38
Non-current derivative assets	24			31
Other non-current assets, net	197			206
Total assets	$	17,465		$	17,553

LIABILITIES AND PARTNERS’ EQUITY
Current liabilities
Accounts payable	$	11		$	12
Accrued liabilities	509			637
Due to affiliates	30			68
Deferred revenue	95			111
Deferred revenue—affiliate	—			1
Derivative liabilities	4			—
Total current liabilities	649			829

Long-term debt, net	16,052			16,046
Non-current deferred revenue	—			1
Non-current derivative liabilities	3			3
Other non-current liabilities	11			10
Other non-current liabilities—affiliate	25			25

Partners’ equity
Common unitholders’ interest (348.6 million units issued and outstanding at March 31, 2018 and December 31, 2017)	1,731			1,670
Subordinated unitholders’ interest (135.4 million units issued and outstanding at March 31, 2018 and December 31, 2017)	(1,019		)	(1,043		)
General partner’s interest (2% interest with 9.9 million units issued and outstanding at March 31, 2018 and December 31, 2017)	13			12
Total partners’ equity	725			639
Total liabilities and partners’ equity	$	17,465		$	17,553

The accompanying notes are an integral part of these consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per unit data)

(unaudited)



	Three Months Ended March 31,
	2018			2017
Revenues
LNG revenues	$	1,015		$	492
LNG revenues—affiliate	503			331
Regasification revenues	65			65
Other revenues	10			2
Other revenues—affiliate	—			1
Total revenues	1,593			891

Operating costs and expenses
Cost of sales (excluding depreciation and amortization expense shown separately below)	837			513
Operating and maintenance expense	95			50
Operating and maintenance expense—affiliate	26			18
General and administrative expense	4			3
General and administrative expense—affiliate	18			22
Depreciation and amortization expense	105			66
Total operating costs and expenses	1,085			672

Income from operations	508			219

Other income (expense)
Interest expense, net of capitalized interest	(185		)	(130		)
Loss on early extinguishment of debt	—			(42		)
Derivative gain, net	8			—
Other income	4			—
Total other expense	(173		)	(172		)

Net income	$	335		$	47

Basic and diluted net income (loss) per common unit	$	0.67		$	(0.80	)

Weighted average number of common units outstanding used for basic and diluted net income (loss) per common unit calculation	348.6			57.1

The accompanying notes are an integral part of these consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY

(in millions)

(unaudited)



	Common Unitholders’ Interest				Subordinated Unitholder’s Interest				General Partner’s Interest				Total Partners’ Equity
	Units	Amount			Units	Amount			Units	Amount			Total Partners’ Equity
Balance at December 31, 2017	348.6	$	1,670		135.4	$	(1,043	)	9.9	$	12		$	639
Net income	—	236			—	92			—	7			335
Distributions	—	(175		)	—	(68		)	—	(6		)	(249		)
Balance at March 31, 2018	348.6	$	1,731		135.4	$	(1,019	)	9.9	$	13		$	725

The accompanying notes are an integral part of these consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)



	Three Months Ended March 31,
	2018			2017
Cash flows from operating activities
Net income	$	335		$	47
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	105			66
Amortization of debt issuance costs, deferred commitment fees, premium and discount	8			10
Loss on early extinguishment of debt	—			42
Total losses on derivatives, net	42			39
Net cash used for settlement of derivative instruments	(3		)	(13		)
Other	2			—
Changes in operating assets and liabilities:
Accounts and other receivables	(50		)	(11		)
Accounts receivable—affiliate	48			59
Advances to affiliate	(56		)	(41		)
Inventory	12			17
Accounts payable and accrued liabilities	(69		)	(38		)
Due to affiliates	(25		)	(68		)
Deferred revenue	(18		)	(11		)
Other, net	—			1
Other, net—affiliate	—			16
Net cash provided by operating activities	331			115

Cash flows from investing activities
Property, plant and equipment, net	(194		)	(524		)
Net cash used in investing activities	(194		)	(524		)

Cash flows from financing activities
Proceeds from issuances of debt	—			2,314
Repayments of debt	—			(703		)
Debt issuance and deferred financing costs	—			(26		)
Distributions to owners	(249		)	(25		)
Net cash provided by (used in) financing activities	(249		)	1,560

Net increase (decrease) in cash, cash equivalents and restricted cash	(112		)	1,151
Cash, cash equivalents and restricted cash—beginning of period	1,589			605
Cash, cash equivalents and restricted cash—end of period	$	1,477		$	1,756

Balances per Consolidated Balance Sheet:



	March 31,
	2018
Cash and cash equivalents	$	—
Restricted cash	1,477
Total cash, cash equivalents and restricted cash	$	1,477

The accompanying notes are an integral part of these consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Through SPL, we are developing, constructing and operating natural gas liquefaction facilities (the “Liquefaction Project”) at the Sabine Pass LNG terminal located in Cameron Parish, Louisiana, on the Sabine-Neches Waterway less than four miles from the Gulf Coast. We plan to construct up to six Trains, which are in various stages of development, construction and operations. Trains 1 through 4 are operational, Train 5 is under construction and Train 6 is being commercialized and has all necessary regulatory approvals in place. We also own a 94-mile pipeline that interconnects the Sabine Pass LNG terminal with a number of large interstate pipelines (the “Creole Trail Pipeline”) through CTPL. We also recognize regasification revenues, which include LNG regasification capacity reservation fees that are received pursuant to our TUAs and tug services fees that are received by Sabine Pass Tug Services, LLC (“Tug Services”), a wholly owned subsidiary of SPLNG. Substantially all of our regasification revenues are received from our two long-term TUA customers.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Cheniere Partners have been prepared in accordance with GAAP for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in our annual report on Form 10-K for the year ended December 31, 2017. In our opinion, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation, have been included. Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on our consolidated financial position, results of operations or cash flows.

On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and subsequent amendments thereto (“ASC 606”) using the full retrospective method. The adoption of ASC 606 represents a change in accounting principle that will provide financial statement readers with enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The adoption of ASC 606 did not impact our previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings.

Results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2018.

We are not subject to either federal or state income tax, as our partners are taxed individually on their allocable share of our taxable income.

NOTE 2—UNITHOLDERS’ EQUITY

The common units and subordinated units represent limited partner interests in us. The holders of the units are entitled to participate in partnership distributions and exercise the rights and privileges available to limited partners under our partnership agreement. Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our partnership agreement). Generally, our available cash is our cash on hand at the end of a quarter less the amount of any reserves established by our general partner. All distributions paid to date have been made from operating surplus as defined in the partnership agreement.

The holders of common units have the right to receive initial quarterly distributions of $0.425 per common unit, plus any arrearages thereon, before any distribution is made to the holders of the subordinated units. The holders of subordinated units will receive distributions only to the extent we have available cash above the initial quarterly distribution requirement for our common unitholders and general partner and certain reserves. Subordinated units will convert into common units on a one-for-one basis when we meet financial tests specified in the partnership agreement. Although common and subordinated unitholders are not obligated to fund losses of the Partnership, their capital accounts, which would be considered in allocating the net assets of the Partnership were it to be liquidated, continue to share in losses.

The general partner interest is entitled to at least 2% of all distributions made by us. In addition, the general partner holds incentive distribution rights (“IDRs”), which allow the general partner to receive a higher percentage of quarterly distributions of

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

available cash from operating surplus after the initial quarterly distributions have been achieved and as additional target levels are met, but may transfer these rights separately from its general partner interest. The higher percentages range from 15% to 50%, inclusive of the general partner interest.

Cheniere Holdings, Blackstone CQP Holdco and the public own a 48.6%, 40.3% and 9.1% interest in us, respectively. Cheniere Holdings’ ownership percentage includes its subordinated units and Blackstone CQP Holdco’s ownership percentage excludes any common units that may be deemed to be beneficially owned by Blackstone Group, an affiliate of Blackstone CQP Holdco.

NOTE 3—RESTRICTED CASH

Restricted cash consists of funds that are contractually restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents on our Consolidated Balance Sheets. As of March 31, 2018 and December 31, 2017, restricted cash consisted of the following (in millions):



	March 31,		December 31,
	2018		2017
Current restricted cash
Liquefaction Project	$	561	$	544
CQP and cash held by guarantor subsidiaries	916		1,045
Total current restricted cash	$	1,477	$	1,589

Under our $2.8 billion credit facilities (the “2016 CQP Credit Facilities”), we, as well as Cheniere Investments, SPLNG and CTPL as our guarantor subsidiaries, are subject to limitations on the use of cash under the terms of the 2016 CQP Credit Facilities and the related depositary agreement governing the extension of credit to us. Specifically, we, Cheniere Investments, SPLNG and CTPL may only withdraw funds from collateral accounts held at a designated depositary bank on a monthly basis and for specific purposes, including for the payment of operating expenses. In addition, distributions and capital expenditures may only be made quarterly and are subject to certain restrictions.

NOTE 4—ACCOUNTS AND OTHER RECEIVABLES

As of March 31, 2018 and December 31, 2017, accounts and other receivables consisted of the following (in millions):



	March 31,		December 31,
	2018		2017
SPL trade receivable	$	232	$	185
Other accounts receivable	8		6
Total accounts and other receivables	$	240	$	191

Pursuant to the accounts agreement entered into with the collateral trustee for the benefit of SPL’s debt holders, SPL is required to deposit all cash received into reserve accounts controlled by the collateral trustee. The usage or withdrawal of such cash is restricted to the payment of liabilities related to the Liquefaction Project and other restricted payments.

NOTE 5—INVENTORY

As of March 31, 2018 and December 31, 2017, inventory consisted of the following (in millions):



	March 31,		December 31,
	2018		2017
Natural gas	$	16	$	17
LNG	14		26
Materials and other	53		52
Total inventory	$	83	$	95

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 6—PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consists of LNG terminal costs and fixed assets, as follows (in millions):



	March 31,			December 31,
	2018			2017
LNG terminal costs
LNG terminal	$	12,690		$	12,703
LNG terminal construction-in-process	3,431			3,310
Accumulated depreciation	(982		)	(880		)
Total LNG terminal costs, net	15,139			15,133
Fixed assets
Fixed assets	23			23
Accumulated depreciation	(17		)	(17		)
Total fixed assets, net	6			6
Property, plant and equipment, net	$	15,145		$	15,139

Depreciation expense was $102 million and $64 million during the three months ended March 31, 2018 and 2017, respectively.

We realized offsets to LNG terminal costs of $124 million in the three months ended March 31, 2017 that were related to the sale of commissioning cargoes because these amounts were earned or loaded prior to the start of commercial operations of the respective Train of the Liquefaction Project, during the testing phase for its construction. We did not realize any offsets to LNG terminal costs in the three months ended March 31, 2018.

NOTE 7—DERIVATIVE INSTRUMENTS

We have entered into the following derivative instruments that are reported at fair value:


•	interest rate swaps to hedge the exposure to volatility in a portion of the floating-rate interest payments under certain credit facilities (“Interest Rate Derivatives”) and


•	commodity derivatives consisting of natural gas supply contracts for the commissioning and operation of the Liquefaction Project (“Physical Liquefaction Supply Derivatives”) and associated economic hedges (collectively, the “Liquefaction Supply Derivatives”).

We recognize our derivative instruments as either assets or liabilities and measure those instruments at fair value. None of our derivative instruments are designated as cash flow hedging instruments, and changes in fair value are recorded within our Consolidated Statements of Income to the extent not utilized for the commissioning process.

The following table shows the fair value of our derivative instruments that are required to be measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017, which are classified as other current assets, non-current derivative assets, derivative liabilities or non-current derivative liabilities in our Consolidated Balance Sheets (in millions).



	Fair Value Measurements as of
	March 31, 2018								December 31, 2017
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
CQP Interest Rate Derivatives asset	$	—	$	27	$	—	$	27	$	—	$	21	$	—	$	21
Liquefaction Supply Derivatives asset	—		—		10		10		2		10		43		55

There have been no changes to our evaluation of and accounting for our derivative positions during the three months ended March 31, 2018. See Note 8—Derivative Instruments of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2017 for additional information.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

We value our Interest Rate Derivatives using an income-based approach, utilizing observable inputs to the valuation model including interest rate curves, risk adjusted discount rates, credit spreads and other relevant data. We value our Liquefaction Supply Derivatives using market based approach incorporating present value techniques, as needed, using observable commodity price curves, when available, and other relevant data.

The fair value of our Physical Liquefaction Supply Derivatives is predominantly driven by market commodity basis prices and our assessment of the associated conditions precedent, including evaluating whether the respective market is available as pipeline infrastructure is developed. Upon the satisfaction of conditions precedent, including completion and placement into service of relevant pipeline infrastructure to accommodate marketable physical gas flow, we recognize a gain or loss based on the fair value of the respective natural gas supply contracts.

We include a portion of our Physical Liquefaction Supply Derivatives as Level 3 within the valuation hierarchy as the fair value is developed through the use of internal models which may be impacted by inputs that are unobservable in the marketplace. The curves used to generate the fair value of our Physical Liquefaction Supply Derivatives are based on basis adjustments applied to forward curves for a liquid trading point. In addition, there may be observable liquid market basis information in the near term, but terms of a Physical Liquefaction Supply Derivatives contract may exceed the period for which such information is available, resulting in a Level 3 classification. In these instances, the fair value of the contract incorporates extrapolation assumptions made in the determination of the market basis price for future delivery periods in which applicable commodity basis prices were either not observable or lacked corroborative market data.

The Level 3 fair value measurements of our Physical Liquefaction Supply Derivatives could be materially impacted by a significant change in certain natural gas market basis spreads due to the contractual notional amount represented by our Level 3 positions, which is a substantial portion of our overall Physical Liquefaction Supply portfolio. The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of March 31, 2018:



	Net Fair Value Asset (in millions)	Valuation Approach	Significant Unobservable Input	Significant Unobservable Inputs Range
Physical Liquefaction Supply Derivatives	$10	Market approach incorporating present value techniques	Basis Spread	$(0.515) - $0.095

The following table shows the changes in the fair value of our Level 3 Physical Liquefaction Supply Derivatives during the three months ended March 31, 2018 and 2017 (in millions):



	Three Months Ended March 31,
	2018			2017
Balance, beginning of period	$	43		$	79
Realized and mark-to-market losses:
Included in cost of sales	(13		)	(41		)
Purchases and settlements:
Purchases	3			4
Settlements	(23		)	(1		)
Balance, end of period	$	10		$	41
Change in unrealized gains relating to instruments still held at end of period	$	(13	)	$	(41	)

Derivative assets and liabilities arising from our derivative contracts with the same counterparty are reported on a net basis, as all counterparty derivative contracts provide for net settlement. The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments in instances when our derivative instruments are in an asset position. Additionally, we evaluate our own ability to meet our commitments in instances where our derivative instruments are in a liability position. Our derivative instruments are subject to contractual provisions which provide for the unconditional right of set-off for all derivative assets and liabilities with a given counterparty in the event of default.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Interest Rate Derivatives

During the three months ended March 31, 2018, there were no changes to the terms of the interest rate swaps (“CQP Interest Rate Derivatives”) we entered into to protect against volatility of future cash flows and hedge a portion of the variable interest payments on the 2016 CQP Credit Facilities. See Note 8—Derivative Instruments of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2017 for additional information.

SPL had entered into interest rate swaps (“SPL Interest Rate Derivatives”) to protect against volatility of future cash flows and hedge a portion of the variable interest payments on the credit facilities it entered into in June 2015 (the “2015 SPL Credit Facilities”). In March 2017, SPL settled the SPL Interest Rate Derivatives and recognized a derivative loss of $7 million in conjunction with the termination of approximately $1.6 billion of commitments under the 2015 SPL Credit Facilities.

As of March 31, 2018, we had the following Interest Rate Derivatives outstanding:

Initial Notional Amount

Maximum Notional Amount

Effective Date

Maturity Date

Weighted Average Fixed Interest Rate Paid

Variable Interest Rate Received

CQP Interest Rate Derivatives

$225 million

$1.3 billion

March 22, 2016

February 29, 2020

1.19%

One-month LIBOR

The following table shows the fair value and location of the CQP Interest Rate Derivatives on our Consolidated Balance Sheets (in millions):



	March 31,		December 31,
Balance Sheet Location	2018		2017
Other current assets	$	12	$	7
Non-current derivative assets	15		14
Total derivative assets	$	27	$	21

The following table shows the changes in the fair value and settlements of our Interest Rate Derivatives recorded in derivative gain, net on our Consolidated Statements of Income during the three months ended March 31, 2018 and 2017 (in millions):



	Three Months Ended March 31,
	2018		2017
CQP Interest Rate Derivatives gain	$	8	$	2
SPL Interest Rate Derivatives loss	—		(2		)

Liquefaction Supply Derivatives

SPL had secured up to approximately 2,179 TBtu and 2,214 TBtu of natural gas feedstock through natural gas supply contracts as of March 31, 2018 and December 31, 2017, respectively. The notional natural gas position of our Liquefaction Supply Derivatives was approximately 1,521 TBtu and 1,520 TBtu as of March 31, 2018 and December 31, 2017, respectively.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The following table shows the fair value and location of our Liquefaction Supply Derivatives on our Consolidated Balance Sheets (in millions):



	Fair Value Measurements as of (1)
Balance Sheet Location	March 31, 2018			December 31, 2017
Other current assets	$	8		$	41
Non-current derivative assets	9			17
Total derivative assets	17			58

Derivative liabilities	(4		)	—
Non-current derivative liabilities	(3		)	(3		)
Total derivative liabilities	(7		)	(3		)

Derivative asset, net	$	10		$	55


(1)	Does not include a collateral call of $1 million for such contracts, which is included in other current assets in our Consolidated Balance Sheets as of both March 31, 2018 and December 31, 2017.

The following table shows the changes in the fair value, settlements and location of our Liquefaction Supply Derivatives recorded on our Consolidated Statements of Income during the three months ended March 31, 2018 and 2017 (in millions):



		Three Months Ended March 31,
	Statement of Income Location (1)	2018		2017
Liquefaction Supply Derivatives loss (2)	Cost of sales	$	50	$	39


(1)	Fair value fluctuations associated with commodity derivative activities are classified and presented consistently with the item economically hedged and the nature and intent of the derivative instrument.


(2)	Does not include the realized value associated with derivative instruments that settle through physical delivery.

Consolidated Balance Sheet Presentation

Our derivative instruments are presented on a net basis on our Consolidated Balance Sheets as described above. The following table shows the fair value of our derivatives outstanding on a gross and net basis (in millions):



	Gross Amounts Recognized			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amounts Presented in the Consolidated Balance Sheets
Offsetting Derivative Assets (Liabilities)	Gross Amounts Recognized			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amounts Presented in the Consolidated Balance Sheets
As of March 31, 2018
CQP Interest Rate Derivatives	$	27		$	—		$	27
Liquefaction Supply Derivatives	25			(8		)	17
Liquefaction Supply Derivatives	(9		)	2			(7		)
As of December 31, 2017
CQP Interest Rate Derivatives	$	21		$	—		$	21
Liquefaction Supply Derivatives	64			(6		)	58
Liquefaction Supply Derivatives	(3		)	—			(3		)

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 8—OTHER NON-CURRENT ASSETS

As of March 31, 2018 and December 31, 2017, other non-current assets, net consisted of the following (in millions):



	March 31,		December 31,
	2018		2017
Advances made under EPC and non-EPC contracts	$	18	$	26
Advances made to municipalities for water system enhancements	93		93
Advances and other asset conveyances to third parties to support LNG terminals	29		30
Tax-related payments and receivables	25		25
Information technology service assets	23		24
Other	9		8
Total other non-current assets, net	$	197	$	206

NOTE 9—ACCRUED LIABILITIES

As of March 31, 2018 and December 31, 2017, accrued liabilities consisted of the following (in millions):



	March 31,		December 31,
	2018		2017
Interest costs and related debt fees	$	186	$	253
Sabine Pass LNG terminal and related pipeline costs	319		384
Other accrued liabilities	4		—
Total accrued liabilities	$	509	$	637

NOTE 10—DEBT

As of March 31, 2018 and December 31, 2017, our debt consisted of the following (in millions):



	March 31,			December 31,
	2018			2017
Long-term debt:
SPL
5.625% Senior Secured Notes due 2021 (“2021 SPL Senior Notes”), net of unamortized premium of $5 and $6	$	2,005		$	2,006
6.25% Senior Secured Notes due 2022 (“2022 SPL Senior Notes”)	1,000			1,000
5.625% Senior Secured Notes due 2023 (“2023 SPL Senior Notes”), net of unamortized premium of $5 and $5	1,505			1,505
5.75% Senior Secured Notes due 2024 (“2024 SPL Senior Notes”)	2,000			2,000
5.625% Senior Secured Notes due 2025 (“2025 SPL Senior Notes”)	2,000			2,000
5.875% Senior Secured Notes due 2026 (“2026 SPL Senior Notes”)	1,500			1,500
5.00% Senior Secured Notes due 2027 (“2027 SPL Senior Notes”)	1,500			1,500
4.200% Senior Secured Notes due 2028 (“2028 SPL Senior Notes”), net of unamortized discount of $1 and $1	1,349			1,349
5.00% Senior Secured Notes due 2037 (“2037 SPL Senior Notes”)	800			800
Cheniere Partners
5.250% Senior Notes due 2025 (“2025 CQP Senior Notes”)	1,500			1,500
2016 CQP Credit Facilities	1,090			1,090
Unamortized debt issuance costs	(197		)	(204		)
Total long-term debt, net	16,052			16,046

Current debt:
$1.2 billion SPL Working Capital Facility (“SPL Working Capital Facility”)	—			—

Total debt, net	$	16,052		$	16,046

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Credit Facilities

Below is a summary of our credit facilities outstanding as of March 31, 2018 (in millions):



	SPL Working Capital Facility		2016 CQP Credit Facilities
Original facility size	$	1,200	$	2,800
Less:
Outstanding balance	—		1,090
Commitments prepaid or terminated	—		1,470
Letters of credit issued	706		20
Available commitment	$	494	$	220

Interest rate	LIBOR plus 1.75% or base rate plus 0.75%		LIBOR plus 2.25% or base rate plus 1.25% (1)
Maturity date	December 31, 2020, with various terms for underlying loans		February 25, 2020, with principal payments due quarterly commencing on March 31, 2019


(1)	There is a 0.50% step-up for both LIBOR and base rate loans beginning on February 25, 2019.

Restrictive Debt Covenants

As of March 31, 2018, we and SPL were in compliance with all covenants related to our respective debt agreements.

Interest Expense

Total interest expense consisted of the following (in millions):



	Three Months Ended March 31,
	2018			2017
Total interest cost	$	232		$	211
Capitalized interest	(47		)	(81		)
Total interest expense, net	$	185		$	130

Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our debt (in millions):



	March 31, 2018				December 31, 2017
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Senior notes, net of premium or discount (1)	$	14,359	$	15,116	$	14,360	$	15,485
2037 SPL Senior Notes (2)	800		838		800		871
Credit facilities (3)	1,090		1,090		1,090		1,090


(1)	Includes 2021 SPL Senior Notes, 2022 SPL Senior Notes, 2023 SPL Senior Notes, 2024 SPL Senior Notes, 2025 SPL Senior Notes, 2026 SPL Senior Notes, 2027 SPL Senior Notes, 2028 SPL Senior Notes and 2025 CQP Senior Notes. The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of these senior notes and other similar instruments.


(2)	The Level 3 estimated fair value was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including our stock price and interest rates based on debt issued by parties with comparable credit ratings to us and inputs that are not observable in the market.


(3)	Includes SPL Working Capital Facility and 2016 CQP Credit Facilities. The Level 3 estimated fair value approximates the principal amount because the interest rates are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 11—REVENUES FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue earned from contracts with customers during the three months ended March 31, 2018 and 2017 (in millions):



	Three Months Ended March 31,
	2018		2017
LNG revenues	$	996	$	485
LNG revenues—affiliate	503		331
Regasification revenues	65		65
Other revenues	10		2
Other revenues—affiliate	—		1
Total revenues from customers	1,574		884
Revenues from derivative instruments	19		7
Total revenues	$	1,593	$	891

LNG Revenues

We have entered into numerous SPAs with third party customers for the sale of LNG on a Free on Board (“FOB”) (delivered to the customer at the Sabine Pass LNG terminal) basis. Our customers generally purchase LNG for a price consisting of a fixed fee per MMBtu of LNG (a portion of which is subject to annual adjustment for inflation) plus a variable fee per MMBtu of LNG equal to approximately 115% of Henry Hub. The fixed fee component is the amount payable to us regardless of a cancellation or suspension of LNG cargo deliveries by the customers. The variable fee component is the amount generally payable to us only upon delivery of LNG plus all future adjustments to the fixed fee for inflation. The SPAs and contracted volumes to be made available under the SPAs are not tied to a specific Train; however, the term of each SPA generally commences upon the date of first commercial delivery of a specified Train.

Revenues from the sale of LNG are recognized at a point in time when the LNG is delivered to the customer, at the Sabine Pass LNG terminal, which is the point legal title, physical possession and the risks and rewards of ownership transfers to the customer. Each individual molecule of LNG is viewed as a separate performance obligation. The stated contract price (including both fixed and variable fees) per MMBtu in each LNG sales arrangement is representative of the stand-alone selling price for LNG at the time the sale was negotiated. We have concluded that the variable fees meet the optional exception for allocating variable consideration. As such, the variable consideration for these contracts is allocated to each distinct molecule of LNG and recognized when that distinct molecule of LNG is delivered to the customer. Because of the use of the optional exception, variable consideration related to the sale of LNG is also not included in the transaction price.

Fees received pursuant to SPAs are recognized as LNG revenues only after substantial completion of the respective Train. Prior to substantial completion, sales generated during the commissioning phase are offset against the cost of construction for the respective Train, as the production and removal of LNG from storage is necessary to test the facility and bring the asset to the condition necessary for its intended use.

Regasification Revenues

The Sabine Pass LNG terminal has operational regasification capacity of approximately 4.0 Bcf/d. Approximately 2.0 Bcf/d of the regasification capacity at the Sabine Pass LNG terminal has been reserved under two long-term TUAs with unaffiliated third-party customers, under which they are required to pay fixed monthly fees regardless of their use of the LNG terminal. Each of the customers has reserved approximately 1.0 Bcf/d of regasification capacity. The customers are each obligated to make monthly capacity payments to SPLNG aggregating approximately $125 million annually for 20 years that commenced in 2009, which is representative of fixed consideration in the contract. A portion of this fee is adjusted annually for inflation which is considered variable consideration. The remaining capacity of the Sabine Pass LNG terminal has been reserved by SPL, for which the associated revenues are eliminated in consolidation.

Because SPLNG is continuously available to provide regasification service on a daily basis with the same pattern of transfer, we have concluded that SPLNG provides a single performance obligation to its customers on a continuous basis over time. We have determined that an output method of recognition based on elapsed time best reflects the benefits of this service to the customer and accordingly, LNG regasification capacity reservation fees are recognized as regasification revenues on a straight-line basis

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

over the term of the respective TUAs. We have concluded that the inflation element within the contract meets the optional exception for allocating variable consideration and accordingly the inflation adjustment is not included in the transaction price and will be recognized over the year in which the inflation adjustment relates on a straight-line basis.

In 2012, SPL entered into a partial TUA assignment agreement with Total Gas & Power North America, Inc. (“Total”), whereby SPL would progressively gain access to Total’s capacity and other services provided under its TUA with SPLNG. This agreement provides SPL with additional berthing and storage capacity at the Sabine Pass LNG terminal that may be used to provide increased flexibility in managing LNG cargo loading and unloading activity, permit SPL to more flexibly manage its LNG storage capacity and accommodate the development of Trains 5 and 6.

Upon substantial completion of Train 3, SPL gained access to a portion of Total’s capacity and other services provided under Total’s TUA with SPLNG. Upon substantial completion of Train 5, SPL will gain access to substantially all of Total’s capacity. Notwithstanding any arrangements between Total and SPL, payments required to be made by Total to SPLNG will continue to be made by Total to SPLNG in accordance with its TUA and we continue to recognize the payments received from Total as revenue. During the three months ended March 31, 2018 and 2017, SPL recorded $8 million and zero as operating and maintenance expense under this partial TUA assignment agreement.

Deferred Revenue Reconciliation

The following table reflects the changes in our contract liabilities, which we classify as “Deferred revenue” (in millions):



	Three Months Ended March 31,
	2018			2017
Deferred revenues, beginning of period	$	111		$	73
Cash received but not yet recognized	95			61
Revenue recognized from prior period deferral	(111		)	(71		)
Deferred revenues, end of period	$	95		$	63

We record deferred revenue when we receive consideration, or such consideration is unconditionally due from a customer, prior to transferring goods or services to the customer under the terms of a sales contract. Changes in deferred revenue during the three months ended March 31, 2018 and 2017 are primarily attributable to differences between the timing of revenue recognition and the receipt of advance payments related to delivery of LNG under certain SPAs.

Transaction Price Allocated to Future Performance Obligations

Because many of our sales contracts have long-term durations, we are contractually entitled to significant future consideration which we have not yet recognized as revenue. The following table discloses the aggregate amount of the transaction price that is allocated to performance obligations that have not yet been satisfied as of March 31, 2018:


(1)	The weighted average recognition timing represents an estimate of the number of years during which we shall have recognized half of the unsatisfied transaction price.

We have elected the following optional exemptions which omit certain potential future sources of revenue from the table above:


(1)	We omit from the table above all performance obligations that are part of a contract that has an original expected duration of one year or less.


(2)	We omit from the table above all variable consideration that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

obligation when that performance obligation qualifies as a series. The table above excludes all variable consideration under our SPAs and TUAs. The amount of revenue from variable fees that is not included in the transaction price will vary based on the future prices of Henry Hub throughout the contract terms, to the extent customers elect to take delivery of their LNG, and adjustments to the consumer price index. Certain of our contracts contain additional variable consideration based on the outcome of contingent events and the movement of various indexes. The receipt of such variable consideration is considered constrained due to the uncertainty of ultimate pricing and receipt and we have not included such variable consideration in the transaction price. During the three months ended March 31, 2018, approximately 56% of our LNG Revenues, 100% of our LNG revenues—affiliate and approximately 3% of our Regasification Revenues were related to variable consideration received from customers.

We have entered into contracts to sell LNG that are conditioned upon one or both of the parties achieving certain milestones such as reaching a final investment decision on a certain liquefaction Train or obtaining financing. These contracts are considered completed contracts for revenue recognition purposes and are included in the transaction price above.

We have elected the practical expedient to omit the disclosure of the transaction price allocated to future performance obligations and an explanation of when the entity expects to recognize the amount as revenue as of March 31, 2017.

NOTE 12—RELATED PARTY TRANSACTIONS

Below is a summary of our related party transactions as reported on our Consolidated Statements of Income for the three months ended March 31, 2018 and 2017 (in millions):



	Three Months Ended March 31,
	2018		2017
LNG revenues—affiliate
Cheniere Marketing SPA and Cheniere Marketing Master SPA	$	503	$	331

Other revenues—affiliate
Terminal Marine Services Agreement	—		1

Operating and maintenance expense—affiliate
Services Agreements	26		18

General and administrative expense—affiliate
Services Agreements	18		22

LNG Terminal Capacity Agreements

Terminal Use Agreements

SPL obtained approximately 2.0 Bcf/d of regasification capacity and other liquefaction support services under a TUA with SPLNG as a result of an assignment in July 2012 by Cheniere Investments of its rights, title and interest under its TUA with SPLNG. SPL is obligated to make monthly capacity payments to SPLNG aggregating approximately $250 million per year (the “TUA Fees”), continuing until at least 20 years after May 2016.

In connection with this TUA, SPL is required to pay for a portion of the cost (primarily LNG inventory) to maintain the cryogenic readiness of the regasification facilities at the Sabine Pass LNG terminal, which is recorded as operating and maintenance expense on our Consolidated Statements of Income.

Cheniere Investments, SPL and SPLNG entered into the terminal use rights assignment and agreement (the “TURA”) pursuant to which Cheniere Investments has the right to use SPL’s reserved capacity under the TUA and has the obligation to pay the TUA Fees required by the TUA to SPLNG. However, the revenue earned by SPLNG from the TUA Fees and the loss incurred by Cheniere Investments under the TURA are eliminated upon consolidation of our Consolidated Financial Statements. We have guaranteed the obligations of SPL under its TUA and the obligations of Cheniere Investments under the TURA.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

In an effort to utilize Cheniere Investments’ reserved capacity under the TURA during construction of the Liquefaction Project, Cheniere Marketing has entered into an amended and restated variable capacity rights agreement with Cheniere Investments (the “Amended and Restated VCRA”) pursuant to which Cheniere Marketing is obligated to pay Cheniere Investments 80% of the expected gross margin of each cargo of LNG that Cheniere Marketing arranges for delivery to the Sabine Pass LNG terminal. Cheniere Investments recorded no revenues—affiliate from Cheniere Marketing during the three months ended March 31, 2018 and 2017, respectively, related to the Amended and Restated VCRA.

Cheniere Marketing SPA

Cheniere Marketing has an SPA with SPL to purchase, at Cheniere Marketing’s option, any LNG produced by SPL in excess of that required for other customers at a price of 115% of Henry Hub plus $3.00 per MMBtu of LNG.

Cheniere Marketing Master SPA

SPL has an agreement with Cheniere Marketing that allows the parties to sell and purchase LNG with each other by executing and delivering confirmations under this agreement.

Commissioning Confirmation

Under the Cheniere Marketing Master SPA, SPL executed a confirmation with Cheniere Marketing that obligates Cheniere Marketing in certain circumstances to buy LNG cargoes produced during the period while Bechtel Oil, Gas and Chemicals, Inc. has control of, and is commissioning, Train 5 of the Liquefaction Project.

Services Agreements

As of March 31, 2018 and December 31, 2017, we had $97 million and $36 million of advances to affiliates, respectively, under the services agreements described below. The non-reimbursement amounts incurred under the services agreements described below are recorded in general and administrative expense—affiliate.

Cheniere Partners Services Agreement

We have a services agreement with Cheniere Terminals, a wholly owned subsidiary of Cheniere, pursuant to which Cheniere Terminals is entitled to a quarterly non-accountable overhead reimbursement charge of $3 million (adjusted for inflation) for the provision of various general and administrative services for our benefit. In addition, Cheniere Terminals is entitled to reimbursement for all audit, tax, legal and finance fees incurred by Cheniere Terminals that are necessary to perform the services under the agreement.

Cheniere Investments Information Technology Services Agreement

Cheniere Investments has an information technology services agreement with Cheniere, pursuant to which Cheniere Investments’ subsidiaries receive certain information technology services. On a quarterly basis, the various entities receiving the benefit are invoiced by Cheniere according to the cost allocation percentages set forth in the agreement. In addition, Cheniere is entitled to reimbursement for all costs incurred by Cheniere that are necessary to perform the services under the agreement.

SPLNG O&M Agreement

SPLNG has a long-term operation and maintenance agreement (the “SPLNG O&M Agreement”) with Cheniere Investments pursuant to which SPLNG receives all necessary services required to operate and maintain the Sabine Pass LNG receiving terminal. SPLNG pays a fixed monthly fee of $130,000 (indexed for inflation) under the SPLNG O&M Agreement and the cost of a bonus equal to 50% of the salary component of labor costs in certain circumstances to be agreed upon between SPLNG and Cheniere Investments at the beginning of each operating year. In addition, SPLNG is required to reimburse Cheniere Investments for its operating expenses, which consist primarily of labor expenses. Cheniere Investments provides the services required under the SPLNG O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere. All payments received by Cheniere Investments under the SPLNG O&M Agreement are required to be remitted to such subsidiary.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

SPLNG MSA

SPLNG has a long-term management services agreement (the “SPLNG MSA”) with Cheniere Terminals, pursuant to which Cheniere Terminals manages the operation of the Sabine Pass LNG receiving terminal, excluding those matters provided for under the SPLNG O&M Agreement. SPLNG pays a monthly fixed fee of $520,000 (indexed for inflation) under the SPLNG MSA.

SPL O&M Agreement

SPL has an operation and maintenance agreement (the “SPL O&M Agreement”) with Cheniere Investments pursuant to which SPL receives all of the necessary services required to construct, operate and maintain the Liquefaction Project. Before each Train of the Liquefaction Project is operational, the services to be provided include, among other services, obtaining governmental approvals on behalf of SPL, preparing an operating plan for certain periods, obtaining insurance, preparing staffing plans and preparing status reports. After each Train is operational, the services include all necessary services required to operate and maintain the Train. Prior to the substantial completion of each Train of the Liquefaction Project, in addition to reimbursement of operating expenses, SPL is required to pay a monthly fee equal to 0.6% of the capital expenditures incurred in the previous month. After substantial completion of each Train, for services performed while the Train is operational, SPL will pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $83,333 (indexed for inflation) for services with respect to the Train. Cheniere Investments provides the services required under the SPL O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere. All payments received by Cheniere Investments under the SPL O&M Agreement are required to be remitted to such subsidiary.

SPL MSA

SPL has a management services agreement (the “SPL MSA”) with Cheniere Terminals pursuant to which Cheniere Terminals manages the construction and operation of the Liquefaction Project, excluding those matters provided for under the SPL O&M Agreement. The services include, among other services, exercising the day-to-day management of SPL’s affairs and business, managing SPL’s regulatory matters, managing bank and brokerage accounts and financial books and records of SPL’s business and operations, entering into financial derivatives on SPL’s behalf and providing contract administration services for all contracts associated with the Liquefaction Project. Prior to the substantial completion of each Train of the Liquefaction Project, SPL pays a monthly fee equal to 2.4% of the capital expenditures incurred in the previous month. After substantial completion of each Train, SPL will pay a fixed monthly fee of $541,667 (indexed for inflation) for services with respect to such Train.

CTPL O&M Agreement

CTPL has an amended long-term operation and maintenance agreement (the “CTPL O&M Agreement”) with Cheniere Investments pursuant to which CTPL receives all necessary services required to operate and maintain the Creole Trail Pipeline. CTPL is required to reimburse the counterparty for its operating expenses, which consist primarily of labor expenses. Cheniere Investments provides the services required under the CTPL O&M Agreement pursuant to a secondment agreement with a wholly owned subsidiary of Cheniere. All payments received by Cheniere Investments under the CTPL O&M Agreement are required to be remitted to such subsidiary.

Agreement to Fund SPLNG’s Cooperative Endeavor Agreements (“CEAs”)

SPLNG has executed CEAs with various Cameron Parish, Louisiana taxing authorities that allowed them to collect certain annual property tax payments from SPLNG from 2007 through 2016. This ten-year initiative represented an aggregate commitment of $25 million in order to aid in their reconstruction efforts following Hurricane Rita, which SPLNG fulfilled in the first quarter of 2016. In exchange for SPLNG’s advance payments of annual ad valorem taxes, Cameron Parish will grant SPLNG a dollar-for-dollar credit against future ad valorem taxes to be levied against the Sabine Pass LNG terminal starting in 2019. Beginning in September 2007, SPLNG entered into various agreements with Cheniere Marketing, pursuant to which Cheniere Marketing would pay SPLNG additional TUA revenues equal to any and all amounts payable by SPLNG to the Cameron Parish taxing authorities under the CEAs. In exchange for such amounts received as TUA revenues from Cheniere Marketing, SPLNG will make payments to Cheniere Marketing equal to, and in the year the Cameron Parish dollar-for-dollar credit is applied against, ad valorem tax levied on our LNG terminal.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

On a consolidated basis, these advance tax payments were recorded to other non-current assets, and payments from Cheniere Marketing that SPLNG utilized to make the ad valorem tax payments were recorded as a long-term obligation. As of both March 31, 2018 and December 31, 2017, we had $25 million of both other non-current assets resulting from SPLNG’s ad valorem tax payments and non-current liabilities—affiliate resulting from these payments received from Cheniere Marketing.

Contracts for Sale and Purchase of Natural Gas and LNG

SPLNG is able to sell and purchase natural gas and LNG under agreements with Cheniere Marketing. Under these agreements, SPLNG purchases natural gas or LNG from Cheniere Marketing at a sales price equal to the actual purchase price paid by Cheniere Marketing to suppliers of the natural gas or LNG, plus any third-party costs incurred by Cheniere Marketing with respect to the receipt, purchase and delivery of natural gas or LNG to the Sabine Pass LNG terminal.

Terminal Marine Services Agreement

In connection with its tug boat lease, Tug Services entered into an agreement with a wholly owned subsidiary of Cheniere to provide its LNG cargo vessels with tug boat and marine services at the Sabine Pass LNG terminal.

LNG Terminal Export Agreement

SPLNG and Cheniere Marketing have an LNG Terminal Export Agreement that provides Cheniere Marketing the ability to export LNG from the Sabine Pass LNG terminal. SPLNG did not record any revenues associated with this agreement during the three months ended March 31, 2018 and 2017.

State Tax Sharing Agreements

SPLNG has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which SPLNG and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, SPLNG will pay to Cheniere an amount equal to the state and local tax that SPLNG would be required to pay if its state and local tax liability were calculated on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from SPLNG under this agreement; therefore, Cheniere has not demanded any such payments from SPLNG. The agreement is effective for tax returns due on or after January 1, 2008.

SPL has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which SPL and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, SPL will pay to Cheniere an amount equal to the state and local tax that SPL would be required to pay if SPL’s state and local tax liability were calculated on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from SPL under this agreement; therefore, Cheniere has not demanded any such payments from SPL. The agreement is effective for tax returns due on or after August 2012.

CTPL has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which CTPL and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, CTPL will pay to Cheniere an amount equal to the state and local tax that CTPL would be required to pay if CTPL’s state and local tax liability were calculated on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from CTPL under this agreement; therefore, Cheniere has not demanded any such payments from CTPL. The agreement is effective for tax returns due on or after May 2013.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 13—NET INCOME (LOSS) PER COMMON UNIT

Net income (loss) per common unit for a given period is based on the distributions that will be made to the unitholders with respect to the period plus an allocation of undistributed net income (loss) based on provisions of the partnership agreement, divided by the weighted average number of common units outstanding. Distributions paid by us are presented on the Consolidated Statement of Partners’ Equity. On April 27, 2018, we declared a $0.55 distribution per common unit and subordinated unit and the related distribution to our general partner and IDR holders to be paid on May 15, 2018 to unitholders of record as of May 7, 2018 for the period from January 1, 2018 to March 31, 2018.

The two-class method dictates that net income (loss) for a period be reduced by the amount of available cash that will be distributed with respect to that period and that any residual amount representing undistributed net income be allocated to common unitholders and other participating unitholders to the extent that each unit may share in net income as if all of the net income for the period had been distributed in accordance with the partnership agreement. Undistributed income is allocated to participating securities based on the distribution waterfall for available cash specified in the partnership agreement. Undistributed losses (including those resulting from distributions in excess of net income) are allocated to common units and other participating securities on a pro rata basis based on provisions of the partnership agreement. Distributions are treated as distributed earnings in the computation of earnings per common unit even though cash distributions are not necessarily derived from current or prior period earnings.

The Class B units, which were mandatorily converted into our common units in accordance with the terms of our partnership agreement on August 2, 2017, were issued at a discount to the market price of the common units into which they were convertible. This discount, totaling $2,130 million, represented a beneficial conversion feature and was reflected as an increase in common and subordinated unitholders’ equity and a decrease in Class B unitholders’ equity to reflect the fair value of the Class B units at issuance on our Consolidated Statement of Partners’ Equity. The beneficial conversion feature was considered a dividend that was distributed ratably with respect to any Class B unit from its issuance date through its conversion date, which resulted in an increase in Class B unitholders’ equity and a decrease in common and subordinated unitholders’ equity. We amortized the beneficial conversion feature through the mandatory conversion date of August 2, 2017 using the effective yield method, with a weighted average effective yield of 888.7% per year and 966.1% per year for Cheniere Holdings’ and Blackstone CQP Holdco’s Class B units, respectively. The impact of the beneficial conversion feature was also included in earnings per unit for the three months ended March 31, 2017.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The following table provides a reconciliation of net income and the allocation of net income to the common units, the subordinated units, the general partner units and IDRs for purposes of computing net income (loss) per unit (in millions, except per unit data).



			Limited Partner Units
	Total		Common Units			Class B Units		Subordinated Units			General Partner Units		IDR
Three Months Ended March 31, 2018
Net income	$	335
Declared distributions	278		192			—		74			6		6
Assumed allocation of undistributed net income (1)	$	57	40			—		16			1		—
Assumed allocation of net income			$	232		$	—	$	90		$	7	$	6

Weighted average units outstanding			348.6			—		135.4
Net income per unit (2)			$	0.67				$	0.67

Three Months Ended March 31, 2017
Net income	$	47
Declared distributions	25		24			—		—			1		—
Amortization of beneficial conversion feature of Class B units	—		(70		)	235		(165		)	—		—
Assumed allocation of undistributed net income	$	22	—			—		22			—		—
Assumed allocation of net income			$	(46	)	$	235	$	(143	)	$	1	$	—

Weighted average units outstanding			57.1			145.3		135.4
Net loss per unit (2)			$	(0.80	)			$	(1.06	)


(1)	Under our partnership agreement, the IDRs participate in net income (loss) only to the extent of the amount of cash distributions actually declared, thereby excluding the IDRs from participating in undistributed net income (loss).


(2)	Earnings per unit in the table may not recalculate exactly due to rounding because it is calculated based on whole numbers, not the rounded numbers presented.

NOTE 14—CUSTOMER CONCENTRATION

The following table shows customers with revenues of 10% or greater of total third-party revenues and customers with accounts receivable balances of 10% or greater of total accounts receivable from third parties:



	Percentage of Total Third-Party Revenues		Percentage of Accounts Receivable from Third Parties
	Three Months Ended March 31,		March 31,	December 31,
	2018	2017	2018	2017
Customer A	31%	54%	33%	39%
Customer B	25%	29%	19%	32%
Customer C	25%	—%	19%	26%
Customer D	*	—%	26%	—%

* Less than 10%

NOTE 15—SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental disclosure of cash flow information (in millions):



	Three Months Ended March 31,
	2018		2017
Cash paid during the period for interest, net of amounts capitalized	$	242	$	175

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The balance in property, plant and equipment, net funded with accounts payable and accrued liabilities (including affiliate) was $200 million and $316 million as of March 31, 2018 and 2017, respectively.

NOTE 16—RECENT ACCOUNTING STANDARDS

The following table provides a brief description of a recent accounting standard that had not been adopted by us as of March 31, 2018:

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Additionally, the following table provides a brief description of recent accounting standards that were adopted by us during the reporting period:



Standard	Description	Date of Adoption	Effect on our Consolidated Financial Statements or Other Significant Matters
ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and subsequent amendments thereto	This standard provides a single, comprehensive revenue recognition model which replaces and supersedes most existing revenue recognition guidance and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard requires that the costs to obtain and fulfill contracts with customers should be recognized as assets and amortized to match the pattern of transfer of goods or services to the customer if expected to be recoverable. The standard also requires enhanced disclosures. This guidance may be adopted either retrospectively to each prior reporting period presented subject to allowable practical expedients (“full retrospective approach”) or as a cumulative-effect adjustment as of the date of adoption (“modified retrospective approach”).	January 1, 2018	We adopted this guidance on January 1, 2018, using the full retrospective method. The adoption of this guidance represents a change in accounting principle that will provide financial statement readers with enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The adoption of this guidance did not impact our previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings. See Note 11—Revenues from Contracts with Customers for additional disclosures.
ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory	This standard requires the immediate recognition of the tax consequences of intercompany asset transfers other than inventory. This guidance may be early adopted, but only at the beginning of an annual period, and must be adopted using a modified retrospective approach.	January 1, 2018	The adoption of this guidance did not have an impact on our Consolidated Financial Statements or related disclosures.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 17—SUPPLEMENTAL GUARANTOR INFORMATION

Our 2025 CQP Senior Notes are jointly and severally guaranteed by each of our subsidiaries other than SPL and, subject to certain conditions governing the release of its guarantee, Sabine Pass LNG-LP, LLC (the “CQP Guarantors”). These guarantees are full and unconditional, subject to certain customary release provisions including (1) the sale, exchange, disposition or transfer (by merger, consolidation or otherwise) of the capital stock or all or substantially all of the assets of the Guarantors, (2) upon the liquidation or dissolution of a Guarantor, (3) following the release of a Guarantor from its guarantee obligations and (4) upon the legal defeasance or satisfaction and discharge of obligations under the CQP Indenture. See Note 11—Debt of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2017 for additional information regarding the 2025 CQP Senior Notes.

The following is condensed consolidating financial information for CQP (“Parent Issuer”), the CQP Guarantors on a combined basis and SPL (“Non-Guarantor”). We have accounted for investments in subsidiaries using the equity method.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Balance Sheet
March 31, 2018
(in millions)

	Parent Issuer		Guarantors		Non-Guarantor		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	—	$	—	$	—	$	—		$	—
Restricted cash	903		13		561		—			1,477
Accounts and other receivables	1		1		238		—			240
Accounts receivable—affiliate	—		26		114		(26		)	114
Advances to affiliate	—		76		91		(70		)	97
Inventory	—		11		72		—			83
Other current assets	13		3		38		—			54
Other current assets—affiliate	—		—		22		(22		)	—
Total current assets	917		130		1,136		(118		)	2,065

Property, plant and equipment, net	79		2,157		12,933		(24		)	15,145
Debt issuance costs, net	18		—		16		—			34
Non-current derivative assets	15		—		9		—			24
Investments in subsidiaries	2,308		180		—		(2,488		)	—
Other non-current assets, net	—		38		159		—			197
Total assets	$	3,337	$	2,505	$	14,253	$	(2,630	)	$	17,465

LIABILITIES AND PARTNERS’ EQUITY
Current liabilities
Accounts payable	$	—	$	4	$	7	$	—		$	11
Accrued liabilities	43		15		451		—			509
Due to affiliates	—		94		32		(96		)	30
Deferred revenue	—		26		69		—			95
Deferred revenue—affiliate	—		22		—		(22		)	—
Derivative liabilities	—		—		4		—			4
Total current liabilities	43		161		563		(118		)	649

Long-term debt, net	2,569		—		13,483		—			16,052
Non-current derivative liabilities	—		—		3		—			3
Other non-current liabilities	—		11		—		—			11
Other non-current liabilities—affiliate	—		25		—		—			25

Partners’ equity	725		2,308		204		(2,512		)	725
Total liabilities and partners’ equity	$	3,337	$	2,505	$	14,253	$	(2,630	)	$	17,465

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Balance Sheet
December 31, 2017
(in millions)

	Parent Issuer		Guarantors			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	—	$	—		$	—		$	—		$	—
Restricted cash	1,033		12			544			—			1,589
Accounts and other receivables	—		2			189			—			191
Accounts receivable—affiliate	—		36			163			(36		)	163
Advances to affiliate	—		20			26			(10		)	36
Inventory	—		10			85			—			95
Other current assets	8		3			54			—			65
Other current assets—affiliate	—		—			21			(21		)	—
Total current assets	1,041		83			1,082			(67		)	2,139

Property, plant and equipment, net	80		2,164			12,920			(25		)	15,139
Debt issuance costs, net	20		—			18			—			38
Non-current derivative assets	14		—			17			—			31
Investments in subsidiaries	2,076		(63		)	—			(2,013		)	—
Other non-current assets, net	—		37			169			—			206
Total assets	$	3,231	$	2,221		$	14,206		$	(2,105	)	$	17,553

LIABILITIES AND PARTNERS’ EQUITY
Current liabilities
Accounts payable	$	—	$	4		$	8		$	—		$	12
Accrued liabilities	23		8			606			—			637
Due to affiliates	—		47			66			(45		)	68
Deferred revenue	—		27			84			—			111
Deferred revenue—affiliate	—		22			—			(21		)	1
Other current liabilities—affiliate	—		1			—			(1		)	—
Total current liabilities	23		109			764			(67		)	829

Long-term debt, net	2,569		—			13,477			—			16,046
Non-current deferred revenue	—		1			—			—			1
Non-current derivative liabilities	—		—			3			—			3
Other non-current liabilities	—		10			—			—			10
Other non-current liabilities—affiliate	—		25			—			—			25

Partners’ equity (deficit)	639		2,076			(38		)	(2,038		)	639
Total liabilities and partners’ equity (deficit)	$	3,231	$	2,221		$	14,206		$	(2,105	)	$	17,553

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2018
(in millions)

	Parent Issuer			Guarantors			Non-Guarantor			Eliminations			Consolidated

Revenues
LNG revenues	$	—		$	—		$	1,015		$	—		$	1,015
LNG revenues—affiliate	—			—			503			—			503
Regasification revenues	—			65			—			—			65
Regasification revenues—affiliate	—			64			—			(64		)	—
Other revenues	—			10			—			—			10
Other revenues—affiliate	—			55			—			(55		)	—
Total revenues	—			194			1,518			(119		)	1,593

Operating costs and expenses
Cost of sales (excluding depreciation and amortization expense shown separately below)	—			—			838			(1		)	837
Cost of sales—affiliate	—			—			8			(8		)	—
Operating and maintenance expense	—			17			78			—			95
Operating and maintenance expense—affiliate	—			32			103			(109		)	26
General and administrative expense	1			1			2			—			4
General and administrative expense—affiliate	3			4			12			(1		)	18
Depreciation and amortization expense	1			18			86			—			105
Total operating costs and expenses	5			72			1,127			(119		)	1,085

Income (loss) from operations	(5		)	122			391			—			508

Other income (expense)
Interest expense, net of capitalized interest	(34		)	—			(151		)	—			(185		)
Derivative gain, net	8			—			—			—			8
Equity earnings of subsidiaries	363			242			—			(605		)	—
Other income (expense)	3			(1		)	2			—			4
Total other income (expense)	340			241			(149		)	(605		)	(173		)

Net income	$	335		$	363		$	242		$	(605	)	$	335

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2017
(in millions)

	Parent Issuer			Guarantors			Non-Guarantor			Eliminations			Consolidated

Revenues
LNG revenues	$	—		$	—		$	492		$	—		$	492
LNG revenues—affiliate	—			—			331			—			331
Regasification revenues	—			65			—			—			65
Regasification revenues—affiliate	—			33			—			(33		)	—
Other revenues	—			2			—			—			2
Other revenues—affiliate	—			51			—			(50		)	1
Total revenues	—			151			823			(83		)	891

Operating costs and expenses
Cost of sales (excluding depreciation and amortization expense shown separately below)	—			—			510			3			513
Cost of sales—affiliate	—			—			4			(4		)	—
Operating and maintenance expense	1			10			39			—			50
Operating and maintenance expense—affiliate	—			34			59			(75		)	18
General and administrative expense	1			—			2			—			3
General and administrative expense—affiliate	3			3			17			(1		)	22
Depreciation and amortization expense	—			19			47			—			66
Total operating costs and expenses	5			66			678			(77		)	672

Income (loss) from operations	(5		)	85			145			(6		)	219

Other income (expense)
Interest expense, net of capitalized interest	(25		)	—			(105		)	—			(130		)
Loss on early extinguishment of debt	—			—			(42		)	—			(42		)
Derivative gain (loss), net	2			—			(2		)	—			—
Equity earnings (losses) of subsidiaries	75			(4		)	—			(71		)	—
Total other income (expense)	52			(4		)	(149		)	(71		)	(172		)

Net income (loss)	$	47		$	81		$	(4	)	$	(77	)	$	47

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2018
(in millions)

	Parent Issuer			Guarantors			Non-Guarantor			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	(10	)	$	135		$	206		$	—		$	331

Cash flows from investing activities
Property, plant and equipment, net	—			(5		)	(189		)	—			(194		)
Investments in subsidiaries	(38		)	—			—			38			—
Distributions received from affiliates, net	167			—			—			(167		)	—
Net cash provided by (used in) investing activities	129			(5		)	(189		)	(129		)	(194		)

Cash flows from financing activities
Distributions to parent	—			(167		)	—			167			—
Contributions from parent	—			38			—			(38		)	—
Distributions to owners	(249		)	—			—			—			(249		)
Net cash used in financing activities	(249		)	(129		)	—			129			(249		)

Net increase (decrease) in cash, cash equivalents and restricted cash	(130		)	1			17			—			(112		)
Cash, cash equivalents and restricted cash—beginning of period	1,033			12			544			—			1,589
Cash, cash equivalents and restricted cash—end of period	$	903		$	13		$	561		$	—		$	1,477

Balances per Condensed Consolidating Balance Sheet:



	March 31, 2018
	Parent Issuer		Guarantors		Non-Guarantor		Eliminations		Consolidated
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—
Restricted cash	903		13		561		—		1,477
Total cash, cash equivalents and restricted cash	$	903	$	13	$	561	$	—	$	1,477

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2017
(in millions)

	Parent Issuer			Guarantors			Non-Guarantor			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	(29	)	$	32		$	116		$	(4	)	$	115

Cash flows from investing activities
Property, plant and equipment, net	—			—			(528		)	4			(524		)
Investments in subsidiaries	(127		)	—			—			127			—
Distributions received from affiliates, net	159			—			—			(159		)	—
Net cash provided by (used in) investing activities	32			—			(528		)	(28		)	(524		)

Cash flows from financing activities
Proceeds from issuances of debt	—			—			2,314			—			2,314
Repayments of debt	—			—			(703		)	—			(703		)
Debt issuance and deferred financing costs	—			—			(26		)	—			(26		)
Distributions to parent	—			(159		)	—			159			—
Contributions from parent	—			127			—			(127		)	—
Distributions to owners	(25		)	—			—			—			(25		)
Net cash provided by (used in) financing activities	(25		)	(32		)	1,585			32			1,560

Net increase (decrease) in cash, cash equivalents and restricted cash	(22		)	—			1,173			—			1,151
Cash, cash equivalents and restricted cash—beginning of period	234			13			358			—			605
Cash, cash equivalents and restricted cash—end of period	$	212		$	13		$	1,531		$	—		$	1,756