cqp-20240630

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 June 30, 2024

☐ 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.)

845 Texas Avenue, Suite 1250

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	New York Stock Exchange

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 August 2, 2024, the registrant had 484,043,623 common units outstanding.

CHENIERE ENERGY PARTNERS, L.P.

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	Definitions	1
Part I. Financial Information
Item 1.	Consolidated Financial Statements	3
	Consolidated Statements of Operations	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Partners’ 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—Trade and Other Receivables, Net of Current Expected Credit Losses	8
	Note 4—Inventory	8
	Note 5—Property, Plant and Equipment, Net of Accumulated Depreciation	9
	Note 6—Derivative Instruments	9

	Note 7—Accrued Liabilities	12
	Note 8—Debt	13
	Note 9—Revenues	14
	Note 10—Related Party Transactions	16
	Note 11—Net Income per Common Unit	17
	Note 12—Customer Concentration	19
	Note 13—Supplemental Cash Flow Information	19

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29

Item 4.	Controls and Procedures	29

Part II. Other Information
Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

	Signatures	32

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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/d						billion cubic feet per day

Bcfe						billion cubic feet equivalent

DOE						U.S. Department of Energy
EPC						engineering, procurement and construction
ESG						environmental, social and governance
FASB						Financial Accounting Standards Board
FERC						Federal Energy Regulatory Commission
FID						final investment decision

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 U.S. dollars 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 or natural gas index price, less a fixed liquefaction fee, shipping and other costs

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
SOFR						Secured Overnight Financing Rate
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

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Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of June 30, 2024, 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.

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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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues
LNG revenues	$	1,454	$	1,415	$	3,174	$	3,521
LNG revenues—affiliate	391		469		915		1,230

Regasification revenues	34		33		68		67

Other revenues	15		16		32		32

Total revenues	1,894		1,933		4,189		4,850

Operating costs and expenses
Cost of sales (excluding items shown separately below)	661		603		1,625		916
Cost of sales—affiliate	—		1		4		18

Operating and maintenance expense	210		263		410		469
Operating and maintenance expense—affiliate	39		38		82		82
Operating and maintenance expense—related party	16		14		29		30


General and administrative expense	3		3		6		6
General and administrative expense—affiliate	23		24		45		46
Depreciation and amortization expense	170		167		338		334
Other operating costs and expenses	5		2		8		2
Other operating costs and expenses—affiliate	1		—		1		—
Total operating costs and expenses	1,128		1,115		2,548		1,903

Income from operations	766		818		1,641		2,947

Other income (expense)
Interest expense, net of capitalized interest	(202)		(207)		(404)		(415)
Loss on modification or extinguishment of debt	(3)		(2)		(3)		(2)
Interest and dividend income	9		13		18		27


Total other expense	(196)		(196)		(389)		(390)

Net income	$	570	$	622	$	1,252	$	2,557

Basic and diluted net income per common unit (1)	$	0.95	$	0.84	$	2.13	$	4.35


Weighted average basic and diluted number of common units outstanding	484.0		484.0		484.0		484.0

(1)In computing basic and diluted net income per common unit, net income is reduced by the amount of undistributed net income allocated to participating securities other than common units, as required under the two-class method. See Note 11—Net Income 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)


	June 30,		December 31,

	2024		2023
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	351	$	575
Restricted cash and cash equivalents	68		56
Trade and other receivables, net of current expected credit losses	286		373
Trade receivables—affiliate	144		278

Advances to affiliate	122		84
Inventory	144		142
Current derivative assets	18		30


Other current assets, net	94		43
Other current assets—affiliate	1		—
Total current assets	1,228		1,581


Property, plant and equipment, net of accumulated depreciation	15,995		16,212
Operating lease assets	80		81

Derivative assets	26		40
Other non-current assets, net	186		188

Total assets	$	17,515	$	18,102

LIABILITIES AND PARTNERS’ DEFICIT
Current liabilities
Accounts payable	$	51	$	69
Accrued liabilities	673		806
Accrued liabilities—related party	4		5
Current debt, net of unamortized debt issuance costs	798		300
Due to affiliates	37		55
Deferred revenue	78		114
Deferred revenue—affiliate	—		3

Current derivative liabilities	235		196
Other current liabilities	10		18
Total current liabilities	1,886		1,566

Long-term debt, net of unamortized discount and debt issuance costs	14,803		15,606

Operating lease liabilities	78		71
Finance lease liabilities	70		14
Derivative liabilities	1,319		1,531
Other non-current liabilities	93		75
Other non-current liabilities—affiliate	22		23
Total liabilities	18,271		18,886



Partners’ deficit
Common unitholders’ interest (484.0 million units issued and outstanding at both June 30, 2024 and December 31, 2023)	1,372		1,038
General partner’s interest (2% interest with 9.9 million units issued and outstanding at both June 30, 2024 and December 31, 2023)	(2,128)		(1,822)
Total partners’ deficit	(756)		(784)
Total liabilities and partners’ deficit	$	17,515	$	18,102

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’ DEFICIT

(in millions)

(unaudited)


Three and Six Months Ended June 30, 2024
	Common Unitholders’ Interest			General Partner’s Interest			Total Partners’ Deficit
	Units	Amount		Units	Amount
















Balance at December 31, 2023	484.0	$	1,038	9.9	$	(1,822)	$	(784)
Net income	—	668		—	14		682

Distributions
Common units, $1.035/unit	—	(501)		—	—		(501)

General partner units	—	—		—	(219)		(219)
Balance at March 31, 2024	484.0	1,205		9.9	(2,027)		(822)





Net income	—	559		—	11		570
Distributions
Common units, $0.810/unit	—	(392)		—	—		(392)
General partner units	—	—		—	(112)		(112)

Balance at June 30, 2024	484.0	$	1,372	9.9	$	(2,128)	$	(756)


Three and Six Months Ended June 30, 2023
	Common Unitholders’ Interest			General Partner’s Interest	Total Partners’ Deficit
	Units	Amount				Units			Amount
Balance at December 31, 2022	484.0	$	(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, 2023	484.0	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, 2023	484.0	$	372		9.9		$	(1,418)		$	(1,046)

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)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities
Net income	$	1,252	$	2,557
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	338		334
Amortization of discount and debt issuance costs	13		15
Loss on modification or extinguishment of debt	3		2
Total gains on derivative instruments, net	(164)		(1,502)

Net cash provided by settlement of derivative instruments	17		2

Other	9		11

Changes in operating assets and liabilities:
Trade and other receivables	88		450
Trade receivables—affiliate	134		417

Advances to affiliate	(38)		21
Inventory	(3)		30


Accounts payable and accrued liabilities	(146)		(739)
Accrued liabilities—related party	—		(2)
Due to affiliates	(18)		(34)
Total deferred revenue	(19)		(21)
Other, net	(62)		1
Other, net—affiliate	(3)		(4)
Net cash provided by operating activities	1,401		1,538

Cash flows from investing activities
Property, plant and equipment, net	(66)		(149)
Other	(3)		(6)
Net cash used in investing activities	(69)		(155)

Cash flows from financing activities
Proceeds from issuances of debt	1,228		1,397
Repayments of debt	(1,530)		(200)
Debt issuance and other financing costs	(15)		(27)


Distributions	(1,224)		(1,472)
Other	(3)		(2)
Net cash used in financing activities	(1,544)		(304)

Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents	(212)		1,079
Cash, cash equivalents and restricted cash and cash equivalents—beginning of period	631		996
Cash, cash equivalents and restricted cash and cash equivalents—end of period	$	419	$	2,075

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 a 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 natural gas supply pipeline that interconnects the Sabine Pass LNG Terminal with several large interstate and intrastate pipelines (the “Creole Trail Pipeline”).

We are pursuing an expansion project to provide additional liquefaction capacity, and we have commenced commercialization to support the additional liquefaction capacity associated with this potential expansion project. 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 FID.

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 10—Related Party Transactions for additional details of the activity under these services agreements during the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024, 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, 2023.

Results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2024.

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 2023-07

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280). This guidance requires a public entity, including entities with a single reportable segment, to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. We plan to adopt this guidance and conform with the applicable disclosures retrospectively when it becomes mandatorily effective for our annual report for the year ending December 31, 2024.

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.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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, which, as defined in our partnership agreement, is generally 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 June 30, 2024, 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—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):


	June 30,		December 31,

	2024		2023
Trade receivables	$	276	$	364
Other receivables	10		9
Total trade and other receivables, net of current expected credit losses	$	286	$	373

NOTE 4—INVENTORY

Inventory consisted of the following (in millions):


	June 30,		December 31,

	2024		2023
Materials	$	111	$	107
Natural gas	19		22
LNG	12		12
Other	2		1
Total inventory	$	144	$	142

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 5—PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

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


	June 30,		December 31,

	2024		2023
LNG terminal
Terminal and interconnecting pipeline facilities	$	20,231	$	20,176

Construction-in-process	191		189
Accumulated depreciation	(4,506)		(4,173)
Total LNG terminal, net of accumulated depreciation	15,916		16,192
Fixed assets
Fixed assets	32		29
Accumulated depreciation	(26)		(26)
Total fixed assets, net of accumulated depreciation	6		3
Assets under finance leases
Tug vessels	74		23
Accumulated depreciation	(1)		(6)
Total assets under finance leases, net of accumulated depreciation	73		17
Property, plant and equipment, net of accumulated depreciation	$	15,995	$	16,212

Depreciation expense was $169 million and $166 million during the three months ended June 30, 2024 and 2023, respectively, and $336 million and $331 million during the six months ended June 30, 2024 and 2023, respectively.

NOTE 6—DERIVATIVE INSTRUMENTS

We have commodity derivatives consisting of natural gas supply contracts, including those under our IPM agreements, for the operation of the Liquefaction Project and expansion project, as well as the 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, fair value or net investment 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 our derivative instruments that are required to be measured at fair value on a recurring basis, distinguished by the fair value hierarchy levels prescribed by GAAP (in millions):


	Fair Value Measurements as of
	June 30, 2024								December 31, 2023
	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)	$	(11)	$	(4)	$	(1,495)	$	(1,510)	$	18	$	1	$	(1,676)	$	(1,657)

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.

We include a significant portion of the 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

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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 includes 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. Our fair value estimates incorporate market participant-based assumptions pertaining to certain contractual uncertainties, including those related to the availability of market information for delivery points, as well as the timing of satisfaction of certain events or development of infrastructure to support natural gas gathering and transport. We may recognize changes in fair value through earnings that could significantly impact our results of operations if and when such uncertainties are resolved.

The Level 3 fair value measurements of our 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 June 30, 2024:

Net Fair Value Liability

(in millions)

Valuation Approach

Significant Unobservable Input

Range of Significant Unobservable Inputs / Weighted Average (1)

Liquefaction Supply Derivatives

$(1,495)

Market approach incorporating present value techniques

Henry Hub basis spread

$(0.648) - $0.415 / $0.007

Option pricing model

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

23% - 394% / 151%

(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.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Balance, beginning of period	$	(1,635)	$	(2,502)	$	(1,676)	$	(3,719)
Realized and change in fair value gains included in net income (1):
Included in cost of sales, existing deals (2)	106		173		98		1,116
Included in cost of sales, new deals (3)	7		3		7		5
Purchases and settlements:
Purchases (4)	—		—		—		—
Settlements (5)	27		71		76		340


Transfers out of level 3 (6)	—		—		—		3
Balance, end of period	$	(1,495)	$	(2,255)	$	(1,495)	$	(2,255)
Favorable changes in fair value relating to instruments still held at the end of the period	$	113	$	176	$	105	$	1,121

(1)Does not include the realized value associated with derivative instruments that settle through physical delivery, as settlement is equal to the 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.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

(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.

(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.

Liquefaction Supply Derivatives

We hold Liquefaction Supply Derivatives which are primarily indexed to the natural gas market and international LNG indices. As of June 30, 2024, the remaining fixed terms of the Liquefaction Supply Derivatives ranged up to approximately 15 years, some of which commence or accelerate upon the satisfaction of certain events or development of infrastructure to support natural gas gathering and transport.

The forward notional amount for the Liquefaction Supply Derivatives was approximately 6,053 TBtu and 6,245 TBtu as of June 30, 2024 and December 31, 2023, respectively, inclusive of amounts under contracts with unsatisfied contractual conditions, and exclusive of extension options that were uncertain to be taken as of June 30, 2024.

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


	Gain Recognized in Consolidated Statements of Operations
Consolidated Statements of Operations Location (1)	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Cost of sales	$	109	$	242	$	164	$	1,502

(1)Does not include the realized value associated with the 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

All existing 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 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 depending on the position of the derivative. 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.

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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 Location	June 30, 2024		December 31, 2023
Current derivative assets	$	18	$	30
Derivative assets	26		40
Total derivative assets	44		70

Current derivative liabilities	(235)		(196)
Derivative liabilities	(1,319)		(1,531)
Total derivative liabilities	(1,554)		(1,727)

Derivative liability, net	$	(1,510)	$	(1,657)

(1)Does not include collateral posted with counterparties by us of $27 million and zero as of June 30, 2024 and December 31, 2023, respectively, which is included in other current assets, net on our Consolidated Balance Sheets, and collateral posted by counterparties to us of zero and $4 million as of June 30, 2024 and December 31, 2023, respectively, which is included in other current liabilities on our Consolidated Balance Sheets.

Consolidated Balance Sheets Presentation

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


	Liquefaction Supply Derivatives
	June 30, 2024		December 31, 2023
Gross assets	$	62	$	88
Offsetting amounts	(18)		(18)
Net assets	$	44	$	70

Gross liabilities	$	(1,601)	$	(1,746)
Offsetting amounts	47		19
Net liabilities	$	(1,554)	$	(1,727)

NOTE 7—ACCRUED LIABILITIES

Accrued liabilities consisted of the following (in millions):


	June 30,		December 31,

	2024		2023
Natural gas purchases	$	335	$	464
Interest costs and related debt fees	238		256
LNG terminal and related pipeline costs	69		77
Other accrued liabilities	31		9
Total accrued liabilities	$	673	$	806

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 8—DEBT

Debt consisted of the following (in millions):


	June 30,		December 31,

	2024		2023
SPL:
Senior Secured Notes:


5.750% due 2024	$	—	$	300
5.625% due 2025	800		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	8,932		10,432

Revolving credit and guaranty agreement (the “SPL Revolving Credit Facility”)	—		—
Total debt - SPL	8,932		10,432

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
5.950% due 2033	1,400		1,400
5.750% due 2034	1,200		—
Total CQP Senior Notes	6,800		5,600

Revolving credit and guaranty agreement (the “CQP Revolving Credit Facility”)	—		—
Total debt - CQP	6,800		5,600
Total debt	15,732		16,032

Current debt, net of unamortized debt issuance costs	(798)		(300)

Unamortized discount and debt issuance costs	(131)		(126)
Total long-term debt, net of unamortized discount and debt issuance costs	$	14,803	$	15,606

Credit Facilities

Below is a summary of our credit facilities outstanding as of June 30, 2024 (in millions):


	SPL Revolving Credit Facility		CQP Revolving Credit Facility
Total facility size	$	1,000	$	1,000
Less:
Outstanding balance	—		—

Letters of credit issued	238		—
Available commitment	$	762	$	1,000

Priority ranking	Senior secured		Senior unsecured
Interest rate on available balance (1)	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 (1)	0.075% - 0.30%		0.10% - 0.30%
Maturity date	June 23, 2028		June 23, 2028

(1)The margin on the interest rate and the commitment fees is subject to change based on the applicable entity’s credit rating.

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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 June 30, 2024, 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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Total interest cost	$	204	$	209	$	408	$	419
Capitalized interest	(2)		(2)		(4)		(4)
Total interest expense, net of capitalized interest	$	202	$	207	$	404	$	415

Fair Value Disclosures

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


	June 30, 2024				December 31, 2023
	Carrying Amount		Estimated Fair Value (1)		Carrying Amount		Estimated Fair Value (1)
Senior notes	$	15,732	$	15,158	$	16,032	$	15,636

(1)As of both June 30, 2024 and December 31, 2023, $1.3 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 the fair value 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 9—REVENUES

The following table represents a disaggregation of revenue earned (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues from contracts with customers
LNG revenues	$	1,454	$	1,415	$	3,174	$	3,521
LNG revenues—affiliate	391		469		915		1,230

Regasification revenues	34		33		68		67
Other revenues	15		16		32		32

Total revenues from contracts with customers	$	1,894	$	1,933	$	4,189	$	4,850

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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):


	June 30,		December 31,

	2024		2023
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 and other non-current liabilities on our Consolidated Balance Sheets (in millions):


	Six Months Ended June 30, 2024

Deferred revenue, beginning of period	$	190
Cash received but not yet recognized in revenue	95
Revenue recognized from prior period deferral	(114)
Deferred revenue, end of period	$	171

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):


	Six Months Ended June 30, 2024

Deferred revenue—affiliate, beginning of period	$	5
Cash received but not yet recognized in revenue	1
Revenue recognized from prior period deferral	—
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:


	June 30, 2024			December 31, 2023
	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)
LNG revenues (2)	$	45.9	7	$	47.6	8
LNG revenues—affiliate	1.0		1	1.4		2
Regasification revenues	0.6		3	0.7		3
Total revenues	$	47.5		$	49.7

(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.

(2)We may enter into contracts to sell LNG that are conditioned upon one or both of the parties achieving certain milestones such as reaching FID on a certain liquefaction Train, obtaining financing or achieving substantial completion of a Train and any related facilities. These contracts are included in the transaction price above when the conditions are considered probable of being met and consideration is not otherwise constrained from ultimate pricing and receipt.

The following potential future sources of revenue are omitted from the table above under exemptions we have elected: (1) all performance obligations that are part of a contract that has an original expected duration of one year or less and (2) substantially all variable consideration under our SPAs and TUAs as well as 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 the underlying variable index, primarily Henry Hub, throughout the contract terms, to the extent customers elect to take delivery of their LNG, and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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 are contractually 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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
LNG revenues	46	%	49	%	48	%	57	%
LNG revenues—affiliate	61	%	66	%	62	%	70	%
Regasification revenues	8	%	7	%	8	%	7	%

NOTE 10—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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
LNG revenues—affiliate
SPAs and Letter Agreements with Cheniere Marketing	$	391	$	468	$	915	$	1,229
Contracts for Sale and Purchase of Natural Gas and LNG with other affiliates	—		1		—		1
Total LNG revenues—affiliate	391		469		915		1,230










Cost of sales—affiliate
Cheniere Marketing Agreements	—		—		4		—
Contracts for Sale and Purchase of Natural Gas and LNG	—		1		—		18
Total cost of sales—affiliate	—		1		4		18






Operating and maintenance expense—affiliate

Services Agreements (see Note 1)	39		38		82		82



Operating and maintenance expense—related party
Natural Gas Transportation and Storage Agreements (1)	16		14		29		30

General and administrative expense—affiliate
Services Agreements (see Note 1)	23		24		45		46

Other operating costs and expenses—affiliate
Services Agreements (see Note 1)	1		—		1		—

(1)This related party is partially owned by Brookfield, who indirectly owns a portion of our limited partner interests.

Assets and liabilities arising from the agreements with affiliates and other related parties referenced in the above table are classified as affiliate and related party, respectively, on our Consolidated Balance Sheets.

Disclosures relating to future consideration under revenue contracts with affiliates is included in Note 9—Revenues.

See our annual report on Form 10-K for the fiscal year ended December 31, 2023 for additional information regarding the agreements referenced in the above table, as well as a description of other agreements we have with our affiliates, including the Terminal Marine Services Agreement. Under this agreement, Tug Services distributed $3 million and $2 million during the three months ended June 30, 2024 and 2023, respectively, and $4 million and $4 million during the six months ended June 30,

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

2024 and 2023, respectively, to Cheniere Terminals, which is recognized as part of the distributions to our general partner interest holders on our Consolidated Statements of Partners’ Deficit.

NOTE 11—NET INCOME PER COMMON UNIT

Net income per common unit for a given period is based on the distributions we incur to the common unitholders with respect to earnings or losses of the reporting period plus an allocation of undistributed net income or loss based on provisions of the partnership agreement, divided by the weighted average number of common units outstanding. Distributions declared by us during the period are presented on the Consolidated Statements of Partners’ Deficit. On July 26, 2024, we declared a cash distribution of $0.810 per common unit to unitholders of record as of August 7, 2024, and the related general partner distribution, to be paid on August 14, 2024 with respect to the three months ended June 30, 2024. These distributions consist of a base amount of $0.775 per unit and a variable amount of $0.035 per unit.

The two-class method dictates that net income 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 in the current period even though cash distributions are not necessarily derived from current period earnings.

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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 general partner units and IDRs for purposes of computing basic and diluted net income per unit (in millions, except per unit data).



	Total		Limited Partner Common Units		General Partner Units		IDR
Three Months Ended June 30, 2024
Net income	$	570
Declared distributions	501		392		10		99
Assumed allocation of undistributed net income (1)	$	69	67		1		—
Assumed allocation of net income			$	459	$	11	$	99

Weighted average units outstanding			484.0
Basic and diluted net income per unit			$	0.95

Three Months Ended June 30, 2023
Net income	$	622
Declared distributions	714		498		15		201
Assumed allocation of undistributed net loss (1)	$	(92)	(91)		(1)		—
Assumed allocation of net income			$	407	$	14	$	201

Weighted average units outstanding			484.0
Basic and diluted net income per unit			$	0.84

Six Months Ended June 30, 2024
Net income	$	1,252
Declared distributions	1,002		784		20		198
Assumed allocation of undistributed net income (1)	$	250	245		5		—
Assumed allocation of net income			$	1,029	$	25	$	198

Weighted average units outstanding			484.0
Basic and diluted net income per unit			$	2.13


Six Months Ended June 30, 2023
Net income	$	2,557
Declared distributions	1,428		997		29		402

Assumed allocation of undistributed net income (1)	$	1,129	1,106		23		—
Assumed allocation of net income			$	2,103	$	52	$	402

Weighted average units outstanding			484.0
Basic and diluted net income per unit			$	4.35

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

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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 12—CUSTOMER CONCENTRATION

The concentration of our customer credit risk in excess of 10% of total revenues and/or trade and other receivables, net of current expected credit losses and contract assets, net of current expected credit losses was as follows:


	Percentage of Total Revenues from External Customers				Percentage of Trade and Other Receivables, Net and Contract Assets, Net from External Customers
	Three Months Ended June 30,		Six Months Ended June 30,		June 30,	December 31,

	2024	2023	2024	2023		2024	2023
Customer A	25%	24%	24%	26%		22%	22%
Customer B	12%	15%	14%	16%		*	16%
Customer C	16%	15%	15%	15%		15%	12%
Customer D	13%	14%	13%	15%