Derivative Instruments (Tables)
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12 Months Ended |
Dec. 31, 2018 |
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| Derivative Instruments and Hedging Activities Disclosures [Line Items] |
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| Fair Value of Derivative Assets and Liabilities |
The following table shows the fair value of our derivative instruments that are required to be measured at fair value on a recurring basis as of December 31, 2018 and 2017, which are classified as other current assets, non-current derivative assets, derivative liabilities or non-current derivative liabilities in our Consolidated Balance Sheets (in millions).
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Fair Value Measurements as of |
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December 31, 2018 |
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December 31, 2017 |
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Quoted Prices in Active Markets
(Level 1)
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Significant Other Observable Inputs
(Level 2)
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Significant Unobservable Inputs
(Level 3)
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Total |
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Quoted Prices in Active Markets
(Level 1)
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Significant Other Observable Inputs
(Level 2)
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Significant Unobservable Inputs
(Level 3)
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Total |
CQP Interest Rate Derivatives asset |
$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
21 |
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$ |
— |
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$ |
21 |
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Liquefaction Supply Derivatives asset (liability) |
5 |
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(23 |
) |
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(25 |
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(43 |
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2 |
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10 |
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43 |
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55 |
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| Fair Value Measurement Inputs and Valuation Techniques |
The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of December 31, 2018:
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Net Fair Value Liability
(in millions)
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Valuation Approach |
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Significant Unobservable Input |
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Significant Unobservable Inputs Range |
Physical Liquefaction Supply Derivatives |
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$(25) |
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Market approach incorporating present value techniques |
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Basis Spread |
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$(0.892) - $0.085 |
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| Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation |
The following table shows the changes in the fair value of our Level 3 Physical Liquefaction Supply Derivatives during the years ended December 31, 2018, 2017 and 2016 (in millions):
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Year Ended December 31, |
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2018 |
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2017 |
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2016 |
Balance, beginning of period |
$ |
43 |
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$ |
79 |
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$ |
32 |
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Realized and mark-to-market gains (losses): |
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Included in cost of sales (1) |
(3 |
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(37 |
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48 |
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Purchases and settlements: |
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Purchases |
(37 |
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14 |
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1 |
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Settlements (1) |
(29 |
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(12 |
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(2 |
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Transfers out of Level 3 (2) |
1 |
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(1 |
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— |
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Balance, end of period |
$ |
(25 |
) |
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$ |
43 |
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$ |
79 |
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Change in unrealized gains (losses) relating to instruments still held at end of period |
$ |
(3 |
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$ |
(37 |
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$ |
49 |
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(1) |
Does not include the decrease in fair value of $1 million related to the realized gains capitalized during the year ended December 31, 2016.
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(2) |
Transferred to Level 2 as a result of observable market for the underlying natural gas purchase agreements. |
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| Derivative Net Presentation on Consolidated Balance Sheets |
The following table shows the fair value of our derivatives outstanding on a gross and net basis (in millions):
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Gross Amounts Recognized |
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Gross Amounts Offset in the Consolidated Balance Sheets |
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Net Amounts Presented in the Consolidated Balance Sheets |
Offsetting Derivative Assets (Liabilities) |
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As of December 31, 2018 |
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Liquefaction Supply Derivatives |
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$ |
63 |
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$ |
(26 |
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$ |
37 |
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Liquefaction Supply Derivatives |
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(92 |
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12 |
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(80 |
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As of December 31, 2017 |
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CQP Interest Rate Derivatives |
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$ |
21 |
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$ |
— |
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$ |
21 |
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Liquefaction Supply Derivatives |
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64 |
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(6 |
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58 |
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Liquefaction Supply Derivatives |
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(3 |
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— |
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(3 |
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| Interest Rate Derivatives [Member] |
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| Derivative Instruments and Hedging Activities Disclosures [Line Items] |
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| Fair Value of Derivative Instruments by Balance Sheet Location |
The following table shows the fair value and location of the CQP Interest Rate Derivatives on our Consolidated Balance Sheets (in millions):
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December 31, |
Consolidated Balance Sheet Location |
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2018 |
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2017 |
Other current assets |
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$ |
— |
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$ |
7 |
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Non-current derivative assets |
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— |
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14 |
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Total derivative assets |
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$ |
— |
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$ |
21 |
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| Derivative Instruments, Gain (Loss) |
The following table shows the changes in the fair value and settlements of our Interest Rate Derivatives recorded in derivative gain, net on our Consolidated Statements of Operations during the years ended December 31, 2018, 2017 and 2016 (in millions):
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Year Ended December 31, |
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2018 |
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2017 |
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2016 |
CQP Interest Rate Derivatives gain |
$ |
14 |
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$ |
6 |
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$ |
12 |
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SPL Interest Rate Derivatives loss |
— |
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(2 |
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(6 |
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| Liquefaction Supply Derivatives [Member] |
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| Derivative Instruments and Hedging Activities Disclosures [Line Items] |
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| Fair Value of Derivative Instruments by Balance Sheet Location |
The following table shows the fair value and location of our Liquefaction Supply Derivatives on our Consolidated Balance Sheets (in millions):
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Fair Value Measurements as of (1) |
Consolidated Balance Sheet Location |
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December 31, 2018 |
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December 31, 2017 |
Other current assets |
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$ |
6 |
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$ |
41 |
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Non-current derivative assets |
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31 |
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17 |
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Total derivative assets |
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37 |
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58 |
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Derivative liabilities |
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(66 |
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— |
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Non-current derivative liabilities |
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(14 |
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(3 |
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Total derivative liabilities |
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(80 |
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(3 |
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Derivative asset (liability), net |
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$ |
(43 |
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$ |
55 |
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(1) |
Does not include collateral calls of $1 million as of both December 31, 2018 and 2017 for such contracts, which are included in other current assets in our Consolidated Balance Sheets.
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| Derivative Instruments, Gain (Loss) |
The following table shows the changes in the fair value, settlements and location of our Liquefaction Supply Derivatives on our Consolidated Statements of Operations during the years ended December 31, 2018, 2017 and 2016 (in millions):
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Year Ended December 31, |
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Statement of Operations Location (1) |
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2018 |
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2017 |
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2016 |
Liquefaction Supply Derivatives loss |
LNG revenues |
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$ |
(1 |
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$ |
— |
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$ |
— |
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Liquefaction Supply Derivatives gain (loss) |
Cost of sales |
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(100 |
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(24 |
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42 |
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(1) |
Does not include the realized value associated with derivative instruments that settle through physical delivery. Fair value fluctuations associated with commodity derivative activities are classified and presented consistently with the item economically hedged and the nature and intent of the derivative instrument. |
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