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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 September 30, 2023
or
    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)
Delaware20-5913059
(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 classTrading SymbolName of each exchange on which registered
Common Units Representing Limited Partner InterestsCQPNYSE 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 filerAccelerated filer
Non-accelerated filerSmaller 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 October 26, 2023, the registrant had 484,039,123 common units outstanding.




CHENIERE ENERGY PARTNERS, L.P.
TABLE OF CONTENTS







i

Table of Contents

DEFINITIONS

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

Common Industry and Other Terms
ASUAccounting Standards Update
Bcfbillion cubic feet
Bcf/dbillion cubic feet per day
Bcf/yrbillion cubic feet per year
Bcfebillion cubic feet equivalent
DOEU.S. Department of Energy
EPCengineering, procurement and construction
ESGenvironmental, social and governance
FASBFinancial Accounting Standards Board
FERCFederal Energy Regulatory Commission
FTA countriescountries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
GAAPgenerally accepted accounting principles in the United States
Henry Hubthe 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 agreementsintegrated 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
LIBORLondon Interbank Offered Rate
LNGliquefied 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
MMBtumillion 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
mtpamillion tonnes per annum
non-FTA countriescountries 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
SECU.S. Securities and Exchange Commission
SOFRSecured Overnight Financing Rate
SPALNG 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
Trainan industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
TUAterminal use agreement



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Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of September 30, 2023, including our ownership of certain subsidiaries, and the references to these entities used in this quarterly report:
CQP Org Chart Sept 2023.jpg

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. 



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PART I.     FINANCIAL INFORMATION



ITEM I.     CONSOLIDATED FINANCIAL STATEMENTS
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
(unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenues
LNG revenues$1,564 $3,130 $5,085 $8,577 
LNG revenues—affiliate515 1,376 1,745 3,268 
LNG revenues—related party   4 
Regasification revenues34 455 101 591 
Other revenues15 15 47 45 
Total revenues2,128 4,976 6,978 12,485 
Operating costs and expenses 
Cost of sales (excluding items shown separately below)682 4,739 1,598 10,445 
Cost of sales—affiliate2 104 20 166 
Cost of sales—related party   1 
Operating and maintenance expense211 189 680 550 
Operating and maintenance expense—affiliate38 39 120 118 
Operating and maintenance expense—related party14 18 44 45 
General and administrative expense2 3 8 3 
General and administrative expense—affiliate20 23 66 70 
Depreciation and amortization expense166 160 500 469 
Other4  6  
Other—affiliate1  1  
Total operating costs and expenses1,140 5,275 3,043 11,867 
Income (loss) from operations988 (299)3,935 618 
Other income (expense) 
Interest expense, net of capitalized interest(205)(222)(620)(641)
Loss on modification or extinguishment of debt(4) (6) 
Interest and dividend income12 7 39 10 
Total other expense(197)(215)(587)(631)
Net income (loss)$791 $(514)$3,348 $(13)
Basic and diluted net income (loss) per common unit (1)
$1.19 $(1.49)$5.53 $(1.36)
Weighted average basic and diluted number of common units outstanding484.0 484.0 484.0 484.0 
(1)In computing basic and diluted net income (loss) per common unit, net income (loss) is reduced by the amount of undistributed net income (loss) allocated to participating securities other than common units, as required under the two-class method. See Note 12—Net Income (Loss) per Common Unit.

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

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except unit data)

September 30,December 31,
20232022
ASSETS(unaudited) 
Current assets  
Cash and cash equivalents$499 $904 
Restricted cash and cash equivalents35 92 
Trade and other receivables, net of current expected credit losses287 627 
Trade receivables—affiliate167 551 
Advances to affiliate141 177 
Inventory131 160 
Current derivative assets34 24 
Margin deposits 35 
Other current assets, net60 50 
Total current assets1,354 2,620 
Property, plant and equipment, net of accumulated depreciation16,341 16,725 
Operating lease assets83 89 
Debt issuance costs, net of accumulated amortization17 8 
Derivative assets111 28 
Other non-current assets, net166 163 
Total assets$18,072 $19,633 
LIABILITIES AND PARTNERS’ DEFICIT
 
Current liabilities
Accounts payable$50 $32 
Accrued liabilities641 1,378 
Accrued liabilities—related party5 6 
Current debt, net of discount and debt issuance costs349  
Due to affiliates42 74 
Deferred revenue151 144 
Deferred revenue—affiliate1 3 
Current operating lease liabilities11 10 
Current derivative liabilities294 769 
Other current liabilities5 5 
Total current liabilities1,549 2,421 
Long-term debt, net of discount and debt issuance costs15,600 16,198 
Operating lease liabilities74 80 
Finance lease liabilities15 18 
Derivative liabilities1,731 3,024 
Other non-current liabilities52  
Other non-current liabilities—affiliate24 23 
Partners’ deficit
Common unitholders’ interest (484.0 million units issued and outstanding at both September 30, 2023 and December 31, 2022)
647 (1,118)
General partner’s interest (2% interest with 9.9 million units issued and outstanding at both September 30, 2023 and December 31, 2022)
(1,620)(1,013)
Total partners’ deficit
(973)(2,131)
Total liabilities and partners’ deficit
$18,072 $19,633 

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

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)
(in millions)
(unaudited)

Three and Nine Months Ended September 30, 2023
Common Unitholders’ InterestGeneral Partner’s InterestTotal Partners’ Deficit
UnitsAmountUnitsAmount
Balance at December 31, 2022484.0 $(1,118)9.9 $(1,013)$(2,131)
Net income— 1,897 — 38 1,935 
Distributions
Common units, $1.070/unit
— (518)— — (518)
General partner units— — — (236)(236)
Balance at March 31, 2023484.0 261 9.9 (1,211)(950)
Net income— 610 — 12 622 
Distributions
Common units, $1.03/unit
— (499)— — (499)
General partner units— — — (219)(219)
Balance at June 30, 2023484.0 372 9.9 (1,418)(1,046)
Net income
— 774 — 17 791 
Distributions
Common units, $1.03/unit
— (499)— — (499)
General partner units— — — (219)(219)
Balance at September 30, 2023484.0 $647 9.9 $(1,620)$(973)

Three and Nine Months Ended September 30, 2022
Common Unitholders’ InterestGeneral Partner’s InterestTotal Partners’ Equity (Deficit)
UnitsAmountUnitsAmount
Balance at December 31, 2021484.0 $1,024 9.9 $(306)$718 
Net income— 157 — 2 159 
Novated IPM agreement (see Note 14)
— (2,712)— — (2,712)
Distributions
Common units, $0.700/unit
— (339)— — (339)
General partner units— — — (56)(56)
Balance at March 31, 2022484.0 (1,870)9.9 (360)(2,230)
Net income— 335 — 7 342 
Distributions
Common units, $1.05/unit
— (508)— — (508)
General partner units— — — (229)(229)
Balance at June 30, 2022484.0 (2,043)9.9 (582)(2,625)
Net loss— (503)— (11)(514)
Distributions
Common units, $1.06/unit
— (513)— — (513)
General partner units— — — (232)(232)
Balance at September 30, 2022484.0 $(3,059)9.9 $(825)$(3,884)

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

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
 Nine Months Ended September 30,
20232022
Cash flows from operating activities  
Net income (loss)
$3,348 $(13)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense500 469 
Amortization of debt issuance costs, premium and discount22 22 
Loss on modification or extinguishment of debt6  
Total losses (gains) on derivative instruments, net
(1,867)2,447 
Net cash provided by (used for) settlement of derivative instruments
6 (54)
Other16 28 
Changes in operating assets and liabilities:
Trade and other receivables, net of current expected credit losses340 (290)
Trade receivables—affiliate384 (231)
Advances to affiliate31 (10)
Inventory30 (67)
Margin deposits35 (52)
Contract assets (387)
Accounts payable and accrued liabilities(662)592 
Accrued liabilities—related party(2)5 
Due to affiliates(30)2 
Total deferred revenue59 6 
Other, net(21)(30)
Other, net—affiliate(2)5 
Net cash provided by operating activities
2,193 2,442 
Cash flows from investing activities  
Property, plant and equipment, net(170)(356)
Other(6) 
Net cash used in investing activities
(176)(356)
Cash flows from financing activities  
Proceeds from issuances of debt1,397  
Redemptions and repayments of debt(1,650) 
Debt issuance and other financing costs(32) 
Debt extinguishment costs(1) 
Distributions(2,190)(1,877)
Other(3) 
Net cash used in financing activities
(2,479)(1,877)
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
(462)209 
Cash, cash equivalents and restricted cash and cash equivalents—beginning of period996 974 
Cash, cash equivalents and restricted cash and cash equivalents—end of period$534 $1,183 

Balances per Consolidated Balance Sheet:
September 30,
2023
Cash and cash equivalents$499 
Restricted cash and cash equivalents35 
Total cash, cash equivalents and restricted cash and cash equivalents$534 
The accompanying notes are an integral part of these consolidated financial statements.

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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 located in Cameron Parish, Louisiana at Sabine Pass (the “Sabine Pass LNG Terminal”) which has six operational Trains, 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 three marine berths. Additionally, the Sabine Pass LNG Terminal includes a 94-mile pipeline owned by our subsidiary, CTPL, that interconnects the Sabine Pass LNG Terminal with a number of large interstate and intrastate pipelines (the “Creole Trail Pipeline”).

We have increased available liquefaction capacity at our Liquefaction Project as a result of debottlenecking and other optimization projects. We hold a significant land position at the Sabine Pass LNG Terminal, which provides opportunity for further liquefaction capacity expansion. In May 2023, certain of our subsidiaries entered the pre-filing review process with the FERC under the National Environmental Policy Act for an expansion adjacent to the Liquefaction Project with a potential production capacity of up to 20 mtpa of LNG. The development of this site or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before we make a positive final investment decision.

We do not have employees and thus we and our subsidiaries have various services agreements with affiliates of Cheniere in the ordinary course of business, including services required to construct, operate and maintain the Liquefaction Project, and administrative services. See Note 11—Related Party Transactions for additional details of the activity under these services agreements during the three and nine months ended September 30, 2023 and 2022.

As of September 30, 2023, 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 and reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the financial results for the interim periods presented. 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, 2022.

Results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2023.

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 as a result of the market transition from LIBOR to alternative reference rates. The temporary optional expedients under the standard became effective March 12, 2020 and will be available until December 31, 2024 following a subsequent amendment to the standard.

As further detailed in Note 9—Debt, all of our existing credit facilities include a variable interest rate indexed to SOFR, incorporated through replacements of previous credit facilities subsequent to the effective date of ASU 2020-04. We elected to apply the optional expedients as applicable to certain replaced facilities; however, the impact of applying the optional expedients was not material, and the transition to SOFR did not have a material impact on our cash flows.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
NOTE 2—UNITHOLDERS’ EQUITY
 
The common units represent limited partner interests in us, which entitle the unitholders to participate in partnership distributions and exercise the rights and privileges available to limited partners under our partnership agreement. Although common unitholders are not obligated to fund losses of the Partnership, their 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 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.
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 we have paid to date have been made from accumulated operating surplus as defined in the partnership agreement.
As of September 30, 2023, our total securities beneficially owned in the form of common units were held 48.6% by Cheniere, 41.5% by CQP Target Holdco L.L.C. (“CQP Target Holdco”) and other affiliates of Blackstone Inc. (“Blackstone”) and Brookfield Asset Management Inc. (“Brookfield”) and 7.9% by the public. All of our 2% general partner interest was held by Cheniere. CQP Target Holdco’s equity interests are 50.0% owned by BIP Chinook Holdco L.L.C., an affiliate of Blackstone, and 50.0% 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
 
As of September 30, 2023 and December 31, 2022, we had $35 million and $92 million of restricted cash and cash equivalents, respectively, for which the usage or withdrawal of such cash is restricted to the payment of liabilities related to the Liquefaction Project as required under certain debt arrangements.

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):
September 30,December 31,
20232022
Trade receivables$275 $603 
Other receivables12 24 
Total trade and other receivables, net of current expected credit losses$287 $627 

NOTE 5—INVENTORY

Inventory consisted of the following (in millions):
September 30,December 31,
20232022
Materials$104 $103 
LNG8 27 
Natural gas16 28 
Other3 2 
Total inventory$131 $160 

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
NOTE 6—PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
 
Property, plant and equipment, net of accumulated depreciation consisted of the following (in millions):
September 30,December 31,
20232022
LNG terminal  
Terminal and interconnecting pipeline facilities$20,122 $20,072 
Construction-in-process201 140 
Accumulated depreciation(4,004)(3,512)
Total LNG terminal, net of accumulated depreciation16,319 16,700 
Fixed assets 
Fixed assets30 29 
Accumulated depreciation(26)(25)
Total fixed assets, net of accumulated depreciation4 4 
Assets under finance leases
Tug vessels23 23 
Accumulated depreciation(5)(2)
Total assets under finance leases, net of accumulated depreciation18 21 
Property, plant and equipment, net of accumulated depreciation$16,341 $16,725 

The following table shows depreciation expense and offsets to LNG terminal costs (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Depreciation expense$166 $158 $497 $465 
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

SPL has commodity derivatives consisting of natural gas supply contracts, including those under the IPM agreement, for the operation of the Liquefaction Project and associated economic hedges (collectively, the “Liquefaction Supply Derivatives”).

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

The following table shows the fair value of the derivative instruments that are required to be measured at fair value on a recurring basis, by the fair value hierarchy levels prescribed by GAAP (in millions):
Fair Value Measurements as of
September 30, 2023December 31, 2022
Quoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
TotalQuoted Prices in Active Markets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Total
Liquefaction Supply Derivatives asset (liability)
$13 $(1)$(1,892)$(1,880)$(12)$(10)$(3,719)$(3,741)

We value the Liquefaction Supply Derivatives using a market or option-based approach incorporating present value techniques, as needed, which incorporates observable commodity price curves, when available, and other relevant data.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
The fair value of the 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 significant portion of our 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 may use in valuing the asset or liability. To the extent valued using an option pricing model, we consider the future prices of energy units for unobservable periods to be a significant unobservable input to estimated net fair value. In estimating the future prices of energy units, we make judgments about market risk related to liquidity of commodity indices and volatility utilizing available market data. Changes in facts and circumstances or additional information may result in revised estimates and judgments, and actual results may differ from these estimates and judgments. We derive our volatility assumptions based on observed historical settled global LNG market pricing or accepted proxies for global LNG market pricing as well as settled domestic natural gas pricing. Such volatility assumptions also contemplate, as of the balance sheet date, observable forward curve data of such indices, as well as evolving available industry data and independent studies. In developing our volatility assumptions, we acknowledge that the global LNG industry is inherently influenced by events such as unplanned supply constraints, geopolitical incidents, unusual climate events including drought and uncommonly mild, by historical standards, winters and summers, and real or threatened disruptive operational impacts to global energy infrastructure. Our current estimate of volatility does not exclude the impact of otherwise rare events unless we believe market participants would exclude such events on account of their assertion that those events were specific to our company and deemed within our control.

The Level 3 fair value measurements of the natural gas positions within the 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 the Level 3 Liquefaction Supply Derivatives as of September 30, 2023:
Net Fair Value Liability
(in millions)
Valuation ApproachSignificant Unobservable InputRange of Significant Unobservable Inputs / Weighted Average (1)
Liquefaction Supply Derivatives$(1,892)Market approach incorporating present value techniques
Henry Hub basis spread
$(0.543) - $0.510 / $0.040
Option pricing model
International LNG pricing spread, relative to Henry Hub (2)
103% - 422% / 213%
(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 the Liquefaction Supply Derivatives.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
The following table shows the changes in the fair value of the Level 3 Liquefaction Supply Derivatives (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Balance, beginning of period$(2,255)$(3,456)$(3,719)$38 
Realized and change in fair value gains (losses) included in net income (loss) (1):
Included in cost of sales, existing deals (2)294 (1,545)1,275 (155)
Included in cost of sales, new deals (3)8  23  
Purchases and settlements:
Purchases (4) 3  (4,896)
Settlements (5)59 (24)522 (11)
Transfers out of level 3 (6)2 (2)7  
Balance, end of period$(1,892)$(5,024)$(1,892)$(5,024)
Favorable (unfavorable) changes in fair value relating to instruments still held at the end of the period
$302 $(1,545)$1,298 $(155)
(1)Does not include the realized value associated with derivative instruments that settle through physical delivery, as settlement is equal to contractually fixed price from trade date multiplied by contractual volume.  See settlements line item in this table.
(2)Impact to earnings on deals that existed at the beginning of the period and continue to exist at the end of the period.
(3)Impact to earnings on deals that were entered into during the reporting period and continue to exist at the end of the period.
(4)Includes any day one gain (loss) recognized during the reporting period on deals that were entered into during the reporting period which continue to exist at the end of the period, in addition to any derivative contracts acquired from entities at a value other than zero on acquisition date, such as derivatives assigned or novated during the reporting period and continuing to exist at the end of the period.
(5)Roll-off in the current period of amounts recognized in our Consolidated Balance Sheets at the end of the previous period due to settlement of the underlying instruments in the current period.
(6)Transferred out of Level 3 as a result of observable market for the underlying natural gas purchase agreements.

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 those derivative contracts with the same counterparty and the unconditional contractual right of set-off on a net basis. The use of derivative instruments exposes SPL to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments, in instances when the derivative instruments are in an asset position. Additionally, counterparties are at risk that SPL will be unable to meet its commitments in instances where the derivative instruments are in a liability position. We incorporate both SPL’s nonperformance risk and the respective counterparty’s nonperformance risk in fair value measurements depending on the position of the derivative. In adjusting the fair value of the 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 holds Liquefaction Supply Derivatives which are primarily indexed to the natural gas market and international LNG indices. The firm terms of the Liquefaction Supply Derivatives range up to approximately 15 years, some of which commence upon the satisfaction of certain events or states of affairs.

The forward notional amount for the Liquefaction Supply Derivatives was approximately 5,642 TBtu and 5,972 TBtu as of September 30, 2023 and December 31, 2022, respectively, excluding notional amounts associated with extension options that were uncertain to be taken as of September 30, 2023.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
The following table shows the effect and location of the Liquefaction Supply Derivatives recorded on our Consolidated Statements of Operations (in millions):
Gain (Loss) Recognized in Consolidated Statements of Operations
 Consolidated Statements of Operations Location (1)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
LNG revenues$ $(3)$ $1 
Cost of sales365 (1,625)1,867 (2,448)
(1)Does not include the realized value associated with Liquefaction Supply Derivatives 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.

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

The following table shows the fair value and location of the Liquefaction Supply Derivatives on our Consolidated Balance Sheets (in millions):
Fair Value Measurements as of (1)
Consolidated Balance Sheets LocationSeptember 30, 2023December 31, 2022
Current derivative assets$34 $24 
Derivative assets111 28 
Total derivative assets145 52 
Current derivative liabilities(294)(769)
Derivative liabilities(1,731)(3,024)
Total derivative liabilities(2,025)(3,793)
Derivative liability, net$(1,880)$(3,741)
(1)Does not include collateral posted by counterparties to us of $1 million as of September 30, 2023, which is included in other current liabilities on our Consolidated Balance Sheets, and collateral posted with counterparties by us of $35 million as of December 31, 2022, which is included in margin deposits on our Consolidated Balance Sheets.

Consolidated Balance Sheets Presentation

The following table shows the fair value of the derivatives outstanding on a gross and net basis (in millions) for the derivative instruments that are presented on a net basis on our Consolidated Balance Sheets:
Liquefaction Supply Derivatives
September 30, 2023December 31, 2022
Gross assets$172 $57 
Offsetting amounts(27)(5)
Net assets$145 $52 
Gross liabilities$(2,029)$(3,814)
Offsetting amounts4 21 
Net liabilities$(2,025)$(3,793)


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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):
September 30,December 31,
20232022
Natural gas purchases$372 $1,017 
Interest costs and related debt fees151 218 
LNG terminal and related pipeline costs86 137 
Other accrued liabilities32 6 
Total accrued liabilities $641 $1,378 

NOTE 9—DEBT

Debt consisted of the following (in millions):
September 30,December 31,
20232022
SPL:
Senior Secured Notes:
5.75% due 2024 (the “2024 SPL Senior Notes”)
$350 $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 
4.746% weighted average rate due 2037
1,782 1,782 
Total SPL Senior Secured Notes
10,482 12,132 
Working capital revolving credit and letter of credit reimbursement agreement (the “SPL Working Capital Facility”)
  
Revolving credit and guaranty agreement (the “SPL Revolving Credit Facility”)
  
Total debt - SPL
10,482 12,132 
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 
5.95% due 2033 (the “2033 CQP Senior Notes”)
1,400  
Total CQP Senior Notes
5,600 4,200 
Credit facilities (the “CQP Credit Facilities”)
  
Revolving credit and guaranty agreement (the “CQP Revolving Credit Facility”)
  
Total debt - CQP
5,600 4,200 
Total debt16,082 16,332 
Current debt, net of discount and debt issuance costs(349) 
Long-term portion of unamortized discount and debt issuance costs, net(133)(134)
Total long-term debt, net of discount and debt issuance costs$15,600 $16,198 



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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 September 30, 2023 (in millions):
SPL Revolving Credit Facility (1)
CQP Revolving Credit Facility (1)
Total facility size$1,000 $1,000 
Less:
Outstanding balance  
Letters of credit issued284  
Available commitment$716 $1,000 
Priority rankingSenior securedSenior unsecured
Interest rate on available balance (2)
SOFR plus credit spread adjustment of 0.1%, plus margin of 1.0% - 1.75% or base rate plus 0.0% - 0.75%
SOFR plus credit spread adjustment of 0.1%, plus margin of 1.125% - 2.0% or base rate plus 0.125% - 1.0%
Commitment fees on undrawn balance (2)
0.075% - 0.30%
0.10% - 0.30%
Maturity dateJune 23, 2028June 23, 2028
(1)In June 2023, we and SPL refinanced and replaced the CQP Credit Facilities and the SPL Working Capital Facility with the CQP Revolving Credit Facility and the SPL Revolving Credit Facility, respectively, resulting in extended maturity dates, revised borrowing capacities, reduced rate of interest and commitment fees applicable thereunder and certain other changes to terms and conditions.
(2)The margin on the interest rate and the commitment fees is subject to change based on the applicable entity’s credit rating.

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. SPL is restricted from making distributions under agreements governing its indebtedness generally until, among other requirements, appropriate reserves have been established for debt service using cash or letters of credit and a historical debt service coverage ratio and projected debt service coverage ratio of at least 1.25:1.00 is satisfied.

As of September 30, 2023, 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 September 30,Nine Months Ended September 30,
2023202220232022
Total interest cost$207 $231 $626 $678 
Capitalized interest(2)(9)(6)(37)
Total interest expense, net of capitalized interest$205 $222 $620 $641 

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our senior notes (in millions):
September 30, 2023December 31, 2022
 Carrying
Amount
Estimated
Fair Value (1)
Carrying
Amount
Estimated
Fair Value (1)
Senior notes$16,082 $14,943 $16,332 $15,386 
(1)As of both September 30, 2023 and December 31, 2022, $1.2 billion of the fair value of our senior notes were classified as Level 3 since these senior notes were valued by applying an unobservable illiquidity adjustment to the price derived from trades or indicative bids of instruments with similar terms, maturities and credit standing. The remainder of our senior notes are classified as Level 2, based on prices derived from trades or indicative bids of the instruments.

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.
NOTE 10—REVENUES

The following table represents a disaggregation of revenue earned (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenues from contracts with customers
LNG revenues$1,564 $3,133 $5,085 $8,576 
LNG revenues—affiliate515 1,376 1,745 3,268 
LNG revenues—related party   4 
Regasification revenues34 455 101 591 
Other revenues15 15 47 45 
Total revenues from contracts with customers2,128 4,979 6,978 12,484 
Net derivative gain (loss) (1)
 (3) 1 
Total revenues$2,128 $4,976 $6,978 $12,485 
(1)See Note 7—Derivative Instruments for additional information about our derivatives.

Termination Agreement with Chevron

In June 2022, Chevron U.S.A. (“Chevron”) entered into an agreement with SPLNG providing for the early termination of the TUA and an associated terminal marine services agreement between the parties and their affiliates (the “Termination Agreement”), effective July 2022, for a lump sum fee of $765 million (the “Termination Fee”). Obligations pursuant to the TUA and associated agreement, including Chevron’s obligation to pay SPLNG capacity payments totaling $125 million annually (adjusted for inflation) from 2023 through 2029, terminated on December 31, 2022, upon SPLNG’s receipt of the Termination Fee in December 2022. We allocated the $765 million Termination Fee to the terminated commitments, with $796 million in cash inflows allocable to the termination of the TUA, which was recognized ratably over the July 6, 2022 to December 31, 2022 period as regasification revenues on our Consolidated Statements of Operations.

Contract Assets and Liabilities

The following table shows our contract assets, net of current expected credit losses, which are classified as other current assets, net and other non-current assets, net on our Consolidated Balance Sheets (in millions):
September 30,December 31,
20232022
Contract assets, net of current expected credit losses$1 $1 

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
The following table reflects the changes in our contract liabilities, which we classify as deferred revenue and other non-current liabilities on our Consolidated Balance Sheets (in millions):
Nine Months Ended September 30, 2023
Deferred revenue, beginning of period$144 
Cash received but not yet recognized in revenue203 
Revenue recognized from prior period deferral(144)
Deferred revenue, end of period$203 

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):
Nine Months Ended September 30, 2023
Deferred revenue—affiliate, beginning of period$8 
Cash received but not yet recognized in revenue6 
Revenue recognized from prior period deferral(8)
Deferred revenue—affiliate, end of period$6 

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:
September 30, 2023December 31, 2022
Unsatisfied
Transaction Price
(in billions)
Weighted Average Recognition Timing (years) (1)Unsatisfied
Transaction Price
(in billions)
Weighted Average Recognition Timing (years) (1)
LNG revenues$48.4 8$50.8 8
LNG revenues—affiliate1.5 22.0 2
Regasification revenues0.7 30.8 4
Total revenues$50.6 $53.6 
(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 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. Additionally, we have excluded variable consideration related to volumes that contractually are subject to additional liquefaction capacity beyond what is currently in construction or operation. The following table summarizes the amount of variable consideration earned under contracts with customers included in the table above:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
LNG revenues53 %78 %55 %74 %
LNG revenues—affiliate64 %77 %68 %76 %
Regasification revenues7 %1 %7 %2 %
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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
NOTE 11—RELATED PARTY TRANSACTIONS
 
Below is a summary of our transactions with our affiliates and other related parties, all in the ordinary course of business, as reported on our Consolidated Statements of Operations (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
LNG revenues—affiliate
SPAs and Letter Agreements with Cheniere Marketing
$513 $1,328 $1,742 $3,173 
Contracts for Sale and Purchase of Natural Gas and LNG with other affiliates2 48 3 95 
Total LNG revenues—affiliate515 1,376 1,745 3,268 
LNG revenues—related party
Natural Gas Transportation and Storage Agreements (1)   4 
Cost of sales—affiliate
Contracts for Sale and Purchase of Natural Gas and LNG2 104 20 166 
Cost of sales—related party
Natural Gas Transportation and Storage Agreements (1)   1 
Operating and maintenance expense—affiliate
Services Agreements (see Note 1)