cqp-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33366

Cheniere Energy Partners, L.P.

(Exact name of registrant as specified in its charter)


Delaware			20-5913059
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

700 Milam Street, Suite 1900

Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

(713) 375-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Units Representing Limited Partner Interests	CQP	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 29, 2022, the registrant had 484,027,123 common units outstanding.

CHENIERE ENERGY PARTNERS, L.P.

TABLE OF CONTENTS


	PART I


























	Definitions	1
Part I. Financial Information
Item 1.	Consolidated Financial Statements	3
	Consolidated Statements of Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Partners’ Equit y (Deficit)	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
	Note 1—Nature of Operations and Basis of Presentation	7
	Note 2—Unitholders’ Equity	7
	Note 3—Restricted Cash	8
	Note 4—Trade and Other Receivables, Net of Current Expected Credit Losses	8
	Note 5—Inventory	8
	Note 6—Property, Plant and Equipment, Net of Accumulated Depreciation	8
	Note 7—Derivative Instruments	9

	Note 8—Accrued Liabilities	12
	Note 9—Debt	12
	Note 10—Revenues from Contracts with Customers	14
	Note 11—Related Party Transactions	15
	Note 12—Net Income (Loss) per Common Unit	19
	Note 13—Customer Concentration	20
	Note 14—Supplemental Cash Flow Information	21

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31

Item 4.	Controls and Procedures	31

Part II. Other Information
Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33



Item 6.	Exhibits	34

	Signatures	35

Table of Contents

DEFINITIONS

As used in this quarterly report, the terms listed below have the following meanings:

Common Industry and Other Terms


ASU						Accounting Standards Update
Bcf						billion cubic feet
Bcf/d						billion cubic feet per day
Bcf/yr						billion cubic feet per year
Bcfe						billion cubic feet equivalent
DOE						U.S. Department of Energy
EPC						engineering, procurement and construction
FASB						Financial Accounting Standards Board
FERC						Federal Energy Regulatory Commission
FTA countries						countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
GAAP						generally accepted accounting principles in the United States
Henry Hub						the final settlement price (in USD per MMBtu) for the New York Mercantile Exchange’s Henry Hub natural gas futures contract for the month in which a relevant cargo’s delivery window is scheduled to begin
IPM agreements						integrated production marketing agreements in which the gas producer sells to us gas on a global LNG index price, less a fixed liquefaction fee, shipping and other costs
LIBOR						London Interbank Offered Rate
LNG						liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
MMBtu						million British thermal units; one British thermal unit measures the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit
mtpa						million tonnes per annum
non-FTA countries						countries with which the United States does not have a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted
SEC						U.S. Securities and Exchange Commission
SPA						LNG sale and purchase agreement
TBtu						trillion British thermal units; one British thermal unit measures the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit
Train						an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
TUA						terminal use agreement

Table of Contents

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of March 31, 2022, including our ownership of certain subsidiaries, and the references to these entities used in this quarterly report:

Unless the context requires otherwise, references to “CQP,” “the Partnership,” “we,” “us” and “our” refer to Cheniere Energy Partners, L.P. and its consolidated subsidiaries, including SPLNG, SPL and CTPL.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. 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,
		2022		2021
Revenues
LNG revenues		$	2,488	$	1,669
LNG revenues—affiliate		757		214

Regasification revenues		68		67

Other revenues		15		13

Total revenues		3,328		1,963

Operating costs and expenses
Cost of sales (excluding items shown separately below)		2,562		948
Cost of sales—affiliate		5		42

Operating and maintenance expense		170		149
Operating and maintenance expense—affiliate		38		34
Operating and maintenance expense—related party		12		10


General and administrative expense		3		2
General and administrative expense—affiliate		23		21
Depreciation and amortization expense		153		139


Total operating costs and expenses		2,966		1,345

Income from operations		362		618

Other expense
Interest expense, net of capitalized interest		(203)		(217)
Loss on modification or extinguishment of debt		—		(54)



Total other expense		(203)		(271)

Net income		$	159	$	347

Basic and diluted net income (loss) per common unit		$	(0.11)	$	0.64


Weighted average number of common units outstanding used for basic and diluted net income (loss) per common unit calculation		484.0		484.0

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

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except unit data)



	March 31,		December 31,
	2022		2021
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	1,156	$	876
Restricted cash and cash equivalents	136		98
Trade and other receivables, net of current expected credit losses	434		580
Accounts receivable—affiliate	290		232
Accounts receivable—related party	—		1
Advances to affiliate	150		141
Inventory	149		176
Current derivative assets	24		21
Other current assets	93		87
Other current assets—affiliate	2		—
Total current assets	2,434		2,212


Property, plant and equipment, net of accumulated depreciation	16,915		16,830
Operating lease assets	96		98
Debt issuance costs, net of accumulated amortization	11		12
Derivative assets	30		33
Other non-current assets, net	172		173

Total assets	$	19,658	$	19,358

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	24	$	21
Accrued liabilities	1,159		1,073
Accrued liabilities—related party	5		4

Due to affiliates	32		67
Deferred revenue	116		155
Deferred revenue—affiliate	—		1
Current operating lease liabilities	8		8
Current derivative liabilities	256		16

Total current liabilities	1,600		1,345

Long-term debt, net of premium, discount and debt issuance costs	17,184		17,177

Operating lease liabilities	87		89
Derivative liabilities	2,999		11

Other non-current liabilities—affiliate	18		18



Partners' equity (deficit)
Common unitholders’ interest (484.0 million units issued and outstanding at both March 31, 2022 and December 31, 2021)	(1,870)		1,024

General partner’s interest (2% interest with 9.9 million units issued and outstanding at March 31, 2022 and December 31, 2021)	(360)		(306)
Total partners' equity (deficit)	(2,230)		718
Total liabilities and partners' equity (deficit)	$	19,658	$	19,358

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

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

(in millions)

(unaudited)


Three Months Ended March 31, 2022
	Common Unitholders’ Interest			General Partner’s Interest	Total Partners’ Deficit
	Units	Amount				Units			Amount














Balance at December 31, 2021	484.0	$	1,024		9.9		$	(306)		$	718











Net income	—	157			—		2			159
Non-cash distribution (see N ote 14)	—	(2,712)			—		—			(2,712)
Distributions
Common units, $0.700/unit	—	(339)			—		—			(339)

General partner units	—	—			—		(56)			(56)

Balance at March 31, 2022	484.0	$	(1,870)		9.9		$	(360)		$	(2,230)


Three Months Ended March 31, 2021
	Common Unitholders’ Interest			General Partner’s Interest	Total Partners’ Equity
	Units	Amount				Units			Amount
















Balance at December 31, 2020	484.0	$	714		9.9		$	(175)		$	539
Net income	—	340			—		7			347
Distributions
Common units, $0.655/unit	—	(316)			—		—			(316)
General partner units	—	—			—		(35)			(35)
Balance at March 31, 2021	484.0	$	738		9.9		$	(203)		$	535

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

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities
Net income	$	159	$	347
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	153		139
Amortization of debt issuance costs, premium and discount	7		8
Loss on modification or extinguishment of debt	—		54
Total losses on derivative instruments, net	525		2

Net cash provided by (used for) settlement of derivative instruments	(9)		20

Other	4		3

Changes in operating assets and liabilities:
Trade and other receivables, net of current expected credit losses	88		(56)
Accounts receivable—affiliate	(74)		86

Advances to affiliate	(8)		18
Inventory	25		4
Accounts payable and accrued liabilities	13		24
Accrued liabilities—related party	1		(1)
Due to affiliates	(20)		(20)
Deferred revenue	(39)		(36)
Other, net	(24)		(6)
Other, net—affiliate	(1)		2
Net cash provided by operating activities	800		588

Cash flows from investing activities
Property, plant and equipment	(87)		(146)

Net cash used in investing activities	(87)		(146)

Cash flows from financing activities
Proceeds from issuances of debt	—		1,500
Redemptions and repayments of debt	—		(1,500)
Debt issuance and other financing costs	—		(19)
Debt extinguishment costs	—		(40)

Distributions to owners	(395)		(351)
Other	—		3
Net cash used in financing activities	(395)		(407)

Net increase in cash, cash equivalents and restricted cash and cash equivalents	318		35
Cash, cash equivalents and restricted cash and cash equivalents—beginning of period	974		1,307
Cash, cash equivalents and restricted cash and cash equivalents—end of period	$	1,292	$	1,342

Balances per Consolidated Balance Sheet:


	March 31,
	2022
Cash and cash equivalents	$	1,156
Restricted cash and cash equivalents	136

Total cash, cash equivalents and restricted cash and cash equivalents	$	1,292

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

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

We own the natural gas liquefaction and export facility in Cameron Parish, Louisiana at Sabine Pass (the “Sabine Pass LNG Terminal”) which has six operational Trains, with Train 6 achieving substantial completion on February 4, 2022, for a total production capacity of approximately 30 mtpa of LNG (the “Liquefaction Project”). The Sabine Pass LNG Terminal also has operational regasification facilities that include five LNG storage tanks, vaporizers and two marine berths, with an additional marine berth that is under construction. We also own a 94-mile pipeline through our subsidiary, CTPL, that interconnects the Sabine Pass LNG Terminal with a number of large interstate pipelines (the “Creole Trail Pipeline”).

As of March 31, 2022, Cheniere owned 48.6% of our limited partner interest in the form of 239.9 million of our common units. Cheniere also owns 100% of our general partner interest and our incentive distribution rights (“IDRs”).

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of CQP have been prepared in accordance with GAAP for interim financial information and in accordance 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 fiscal year ended December 31, 2021. Reclassifications that are not material to our Consolidated Financial Statements, if any, are made to prior period financial information to conform to the current year presentation.

Results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2022.

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.

Recent Accounting Standards

ASU 2020-04

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance primarily provides temporary optional expedients which simplify the accounting for contract modifications to existing debt agreements expected to arise from the market transition from LIBOR to alternative reference rates. The optional expedients were available to be used upon issuance of this guidance but we have not yet applied the guidance because we have not yet modified any of our existing contracts for reference rate reform. Once we apply an optional expedient to a modified contract and adopt this standard, the guidance will be applied to all subsequent applicable contract modifications until December 31, 2022, at which time the optional expedients are no longer available.

NOTE 2—UNITHOLDERS’ EQUITY

The common 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 accumulated operating surplus as defined in the partnership agreement.

Although common unitholders are not obligated to fund losses of the Partnership, its capital account, which would be considered in allocating the net assets of the Partnership were it to be liquidated, continues 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 IDRs, which allow the general partner to receive a higher percentage of quarterly distributions of available cash from

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

operating surplus 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.

As of March 31, 2022, our total securities beneficially owned in the form of common units were held 48.6% by Cheniere, 41.4% by CQP Target Holdco L.L.C. (“CQP Target Holdco”) and other affiliates of Blackstone Inc. (“Blackstone”) and Brookfield Asset Management Inc. (“Brookfield”) and 8.0% by the public. All of our 2% general partner interest was held by Cheniere. CQP Target Holdco’s equity interests are 50.00% owned by BIP Chinook Holdco L.L.C., an affiliate of Blackstone and 50.00% owned by BIF IV Cypress Aggregator (Delaware) LLC, an affiliate of Brookfield. The ownership of CQP Target Holdco, Blackstone and Brookfield are based on their most recent filings with the SEC.

NOTE 3—RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents consist of funds that are contractually or legally 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, 2022 and December 31, 2021, we had $136 million and $98 million of restricted cash and cash equivalents, respectively.

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 4—TRADE AND OTHER RECEIVABLES, NET OF CURRENT EXPECTED CREDIT LOSSES

Trade and other receivables, net of current expected credit losses consisted of the following (in millions):



	March 31,		December 31,
	2022		2021
SPL trade receivables	$	411	$	546
Other receivables	23		34
Total trade and other receivables, net of current expected credit losses	$	434	$	580

NOTE 5—INVENTORY

Inventory consisted of the following (in millions):



	March 31,		December 31,
	2022		2021
Materials	$	89	$	86
LNG	33		45
Natural gas	25		43
Other	2		2
Total inventory	$	149	$	176

NOTE 6—PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

Property, plant and equipment, net of accumulated depreciation consisted of the following (in millions):



	March 31,		December 31,
	2022		2021
LNG terminal
LNG terminal and interconnecting pipeline facilities	$	19,432	$	16,973

LNG terminal construction-in-process	524		2,746
Accumulated depreciation	(3,044)		(2,893)
Total LNG terminal, net of accumulated depreciation	16,912		16,826
Fixed assets
Fixed assets	28		29
Accumulated depreciation	(25)		(25)
Total fixed assets, net of accumulated depreciation	3		4
Property, plant and equipment, net of accumulated depreciation	$	16,915	$	16,830

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The following table shows depreciation expense and offsets to LNG terminal costs (in millions):


	Three Months Ended March 31,
		2022		2021
Depreciation expense		$	152	$	138
Offsets to LNG terminal costs (1)		148		—

(1)We recognize offsets to LNG terminal costs related to the sale of commissioning cargoes because these amounts were earned or loaded prior to the start of commercial operations of the respective Trains of the Liquefaction Project during the testing phase for its construction.

NOTE 7—DERIVATIVE INSTRUMENTS

We have entered into commodity derivatives consisting of natural gas supply contracts, including those under SPL’s IPM agreement, for the commissioning and operation of the Liquefaction Project (“Physical Liquefaction Supply Derivatives”) and associated economic hedges (“Financial Liquefaction Supply Derivatives,” and collectively with the Physical Liquefaction Supply Derivatives, 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 or fair value hedging instruments, and changes in fair value are recorded within our Consolidated Statements of Income to the extent not utilized for the commissioning process, in which case it is capitalized.

The following table shows the fair value of our derivative instruments that are required to be measured at fair value on a recurring basis (in millions):


	Fair Value Measurements as of
	March 31, 2022								December 31, 2021
	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

Liquefaction Supply Derivatives asset (liability)	$	(26)	$	(13)	$	(3,162)	$	(3,201)	$	2	$	(13)	$	38	$	27

We value our Liquefaction Supply Derivatives using a market-based approach or option-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 observable and unobservable market commodity prices and, as applicable to our natural gas supply contracts, our assessment of the associated events deriving fair value including, but not limited to, evaluation of whether the respective market exists from the perspective of market participants as infrastructure is developed.

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 incorporate significant unobservable inputs. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks, such as future prices of energy units for unobservable periods, liquidity and volatility.

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The Level 3 fair value measurements of natural gas positions within our Physical Liquefaction Supply Derivatives could be materially impacted by a significant change in certain natural gas and international LNG prices. The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of March 31, 2022:

Net Fair Value Liability
(in millions)

Valuation Approach

Significant Unobservable Input

Range of Significant Unobservable Inputs / Weighted Average (1)

Physical Liquefaction Supply Derivatives

$(3,162)

Market approach incorporating present value techniques

Henry Hub basis spread

$(1.578) - $0.215 / $(0.004)

Option pricing model

International LNG pricing spread, relative to Henry Hub (2)

104% - 459% / 206%

(1)Unobservable inputs were weighted by the relative fair value of the instruments.

(2)Spread contemplates U.S. dollar-denominated pricing.

Increases or decreases in basis or pricing spreads, in isolation, would decrease or increase, respectively, the fair value of our Physical Liquefaction Supply Derivatives.

The following table shows the changes in the fair value of our Level 3 Physical Liquefaction Supply Derivatives (in millions):


	Three Months Ended March 31,
		2022		2021
Balance, beginning of period		$	38	$	(21)
Realized and mark-to-market losses:
Included in cost of sales		(53)		(12)
Purchases and settlements:
Purchases (1)		(3,141)		1
Settlements		(6)		(4)

Balance, end of period		$	(3,162)	$	(36)
Change in unrealized losses relating to instruments still held at end of period		$	(53)	$	(12)

(1)Includes any assignments during the period.

All counterparty derivative contracts provide for the unconditional right of set-off in the event of default. We have elected to report derivative assets and liabilities arising from our derivative contracts with the same counterparty on a net basis. 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, counterparties are at risk that we will be unable to meet our commitments in instances where our derivative instruments are in a liability position. We incorporate both our own nonperformance risk and the respective counterparty’s nonperformance risk in fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of any applicable credit enhancements, such as collateral postings, set-off rights and guarantees.

Liquefaction Supply Derivatives

SPL has entered into primarily index-based Liquefaction Supply Derivatives. The remaining minimum terms of the physical natural gas supply contracts range up to 15 years, some of which commence upon the satisfaction of certain conditions precedent. The terms of the Financial Liquefaction Supply Derivatives range up to approximately two years.

The forward notional amount for our Liquefaction Supply Derivatives was approximately 5,550 TBtu and 5,194 TBtu as of March 31, 2022 and December 31, 2021, respectively, excluding notional amounts associated with extension options that were uncertain to be taken as of March 31, 2022.

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Fair Value and Location of Derivative Assets and Liabilities on the Consolidated Balance Sheets

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)
Consolidated Balance Sheets Location	March 31, 2022		December 31, 2021
Current derivative assets	$	24	$	21
Derivative assets	30		33
Total derivative assets	54		54

Current derivative liabilities	(256)		(16)
Derivative liabilities	(2,999)		(11)
Total derivative liabilities	(3,255)		(27)

Derivative asset (liability), net	$	(3,201)	$	27

(1)Does not include collateral posted with counterparties by us of $32 million and $7 million, which are included in other current assets in our Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively.

The following table shows the effect and location of our Liquefaction Supply Derivatives recorded on our Consolidated Statements of Income (in millions):


		Loss Recognized in Consolidated Statements of Income
Consolidated Statements of Income Location (1)	Three Months Ended March 31,
			2022		2021

Cost of sales			$	(525)	$	(2)

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

Consolidated Balance Sheets 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):


	Liquefaction Supply Derivatives
As of March 31, 2022
Gross assets	$	74
Offsetting amounts	(20)
Net assets	$	54

Gross liabilities	$	(3,266)
Offsetting amounts	11
Net liabilities	$	(3,255)

As of December 31, 2021
Gross assets	$	79
Offsetting amounts	(25)
Net assets	$	54

Gross liabilities	$	(33)
Offsetting amounts	6
Net liabilities	$	(27)

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 8—ACCRUED LIABILITIES

Accrued liabilities consisted of the following (in millions):



	March 31,		December 31,
	2022		2021
Accrued natural gas purchases	$	692	$	786
Interest costs and related debt fees	215		180
LNG terminal and related pipeline costs	240		101
Other accrued liabilities	12		6
Total accrued liabilities	$	1,159	$	1,073

NOTE 9—DEBT

Debt consisted of the following (in millions):



	March 31,		December 31,
	2022		2021
SPL:
Senior Secured Notes:

5.625% due 2023	$	1,500	$	1,500
5.75% due 2024	2,000		2,000
5.625% due 2025	2,000		2,000
5.875% due 2026	1,500		1,500
5.00% due 2027	1,500		1,500
4.200% due 2028	1,350		1,350
4.500% due 2030	2,000		2,000
4.27% weighted average rate due 2037	1,282		1,282
Total SPL Senior Secured Notes	13,132		13,132
$1.2 billion Working Capital Revolving Credit and Letter of Credit Reimbursement Agreement (“2020 SPL Working Capital Facility”)	—		—
Total debt - SPL	13,132		13,132

CQP:
Senior Notes:


4.500% due 2029	1,500		1,500
4.000% due 2031	1,500		1,500
3.25% due 2032	1,200		1,200
Total CQP Senior Notes	4,200		4,200
CQP Credit Facilities executed in 2019 (“2019 CQP Credit Facilities”)	—		—
Total debt - CQP	4,200		4,200
Total debt	17,332		17,332



Unamortized premium, discount and debt issuance costs, net	(148)		(155)
Total long-term debt, net of premium, discount and debt issuance costs	$	17,184	$	17,177

Table of Contents

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, 2022 (in millions):


	2020 SPL Working Capital Facility		2019 CQP Credit Facilities
Total facility size	$	1,200	$	750
Less:
Outstanding balance	—		—

Letters of credit issued	368		—
Available commitment	$	832	$	750

Priority ranking	Senior secured		Senior secured
Interest rate on available balance	LIBOR plus 1.125% - 1.750% or base rate plus 0.125% - 0.750%		LIBOR plus 1.25% - 2.125% or base rate plus 0.25% - 1.125%
Weighted average interest rate of outstanding balance	n/a		n/a
Commitment fees on undrawn balance	0.20%		0.49%
Maturity date	March 19, 2025		May 29, 2024

Restrictive Debt Covenants

The indentures governing our senior notes and other agreements underlying our debt contain customary terms and events of default and certain covenants that, among other things, may limit us and our restricted subsidiaries’ ability to make certain investments or pay dividends or distributions. We and SPL are restricted from making distributions under agreements governing our and SPL’s indebtedness generally until, among other requirements, deposits are made into any required debt service reserve accounts and a historical debt service coverage ratio and projected debt service coverage ratio of at least 1.25:1.00 is satisfied.

As of March 31, 2022, we and SPL were in compliance with all covenants related to our respective debt agreements.

Interest Expense

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


	Three Months Ended March 31,
		2022		2021
Total interest cost		$	224	$	247
Capitalized interest		(21)		(30)
Total interest expense, net of capitalized interest		$	203	$	217

Fair Value Disclosures

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


	March 31, 2022				December 31, 2021
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Senior notes — Level 2 (1)	$	16,050	$	16,507	$	16,050	$	17,496
Senior notes — Level 3 (2)	1,282		1,297		1,282		1,466

(1)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 interest rates based on debt issued by parties with comparable credit ratings to us and inputs that are not observable in the market.

The estimated fair value of our credit facilities approximates the principal amount outstanding 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.

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 10—REVENUES FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue earned from contracts with customers (in millions):


	Three Months Ended March 31,
		2022		2021
LNG revenues		$	2,488	$	1,669
LNG revenues—affiliate		757		214

Regasification revenues		68		67
Other revenues		15		13



Total revenues		$	3,328	$	1,963

Contract Assets and Liabilities

The following table shows our contract assets, net of current expected credit losses, which are classified as other current assets and other non-current assets, net on our Consolidated Balance Sheets (in millions):



	March 31,		December 31,
	2022		2021
Contract assets, net of current expected credit losses	$	1	$	1

The following table reflects the changes in our contract liabilities, which we classify as deferred revenue on our Consolidated Balance Sheets (in millions):


	Three Months Ended March 31, 2022

Deferred revenue, beginning of period	$	155
Cash received but not yet recognized in revenue	116
Revenue recognized from prior period deferral	(155)
Deferred revenue, end of period	$	116

The following table reflects the changes in our contract liabilities to affiliate, which we classify as deferred revenue—affiliate and other non-current liabilities—affiliate on our Consolidated Balance Sheets (in millions):


	Three Months Ended March 31, 2022

Deferred revenue—affiliate, beginning of period	$	3
Cash received but not yet recognized in revenue	3
Revenue recognized from prior period deferral	(3)
Deferred revenue—affiliate, end of period	$	3

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:


	March 31, 2022			December 31, 2021
	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)
LNG revenues	$	51.2	8	$	49.3	9
LNG revenues—affiliate	2.0		3	2.1		3
Regasification revenues	1.8		4	1.9		4
Total revenues	$	55.0		$	53.3

(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.

Table of Contents

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

We have elected the following 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)The table above excludes substantially all variable consideration under our SPAs and TUAs. 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 obligation when that performance obligation qualifies as a series. 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. We have not included such variable consideration in the transaction price to the extent the consideration is considered constrained due to the uncertainty of ultimate pricing and receipt. Approximately 67% and 51% of our LNG revenues from contracts included in the table above during the three months ended March 31, 2022 and 2021, respectively, were related to variable consideration received from customers. 100% of our LNG revenues—affiliate from contracts included in the table above during both the three months ended March 31, 2022 and 2021 were related to variable consideration received from customers. During the three months ended March 31, 2022 and 2021, approximately 6% and 3%, respectively, of our regasification revenues were related to variable consideration received from customers.

We may enter 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, obtaining financing or achieving substantial completion of a Train and any related facilities. These contracts are considered completed contracts for revenue recognition purposes and are included in the transaction price above when the conditions are considered probable of being met.

NOTE 11—RELATED PARTY TRANSACTIONS

Below is a summary of our related party transactions as reported on our Consolidated Statements of Income (in millions):


	Three Months Ended March 31,
		2022		2021
LNG revenues—affiliate
Cheniere Marketing Agreements		$	745	$	210
Contracts for Sale and Purchase of Natural Gas and LNG		12		4
Total LNG revenues—affiliate		757		214










Cost of sales—affiliate
Cheniere Marketing Agreements		—		34
Contracts for Sale and Purchase of Natural Gas and LNG		5		8
Total cost of sales—affiliate		5		42