Annual report pursuant to Section 13 and 15(d)

Derivative Instruments (Tables)

v3.25.0.1
Derivative Instruments (Tables)
 12 Months Ended
Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
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, distinguished by the fair value hierarchy levels prescribed by GAAP (in millions):
Fair Value Measurements as of
December 31, 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)
 $ —  $ 26  $ (1,307) $ (1,281) $ 18  $ 1  $ (1,676) $ (1,657)
Fair Value Measurement Inputs and Valuation Techniques The following table includes quantitative information for the unobservable inputs for the Level 3 Liquefaction Supply Derivatives as of December 31, 2024:
Net Fair Value Liability
(in millions)
 Valuation Approach Significant Unobservable Input Range of Significant Unobservable Inputs / Weighted Average (1)
Liquefaction Supply Derivatives $(1,307) Market approach incorporating present value techniques
Henry Hub basis spread
$(0.495) - $1.144 / $0.056
Option pricing model
International LNG pricing spread, relative to Henry Hub (2)
90% - 410% / 202%
(1)Unobservable inputs were weighted by the relative fair value of the instruments.
(2)Spread contemplates U.S. dollar-denominated pricing.
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
The following table shows the changes in the fair value of the Level 3 Liquefaction Supply Derivatives (in millions):
Year Ended December 31,
2024 2023 2022
Balance, beginning of period $ (1,676) $ (3,719) $ 38 
Realized and change in fair value gains (losses) included in net income (1):
Included in cost of sales, existing deals (2) 165  1,302  (228)
Included in cost of sales, new deals (3) 19  16  (804)
Purchases and settlements:
Purchases (4) —  —  (2,712)
Settlements (5) 185  724  (13)
Transfers out of level 3 (6) —  1  — 
Balance, end of period $ (1,307) $ (1,676) $ (3,719)
Favorable (unfavorable) changes in fair value relating to instruments still held at the end of the period
 $ 184  $ 1,318  $ (1,032)
(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.
(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. For further discussion of the IPM agreement that was novated to us in 2022, see Note 17—Supplemental Cash Flow Information.
(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.
Derivative Instruments, Gain (Loss)
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)
 Year Ended December 31,
2024 2023 2022
LNG revenues $ —  $ —  $ 1 
Cost of sales 402  2,082  (1,159)
(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 of Derivative Instruments by Balance Sheet Location
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
Consolidated Balance Sheets Location December 31, 2024 December 31, 2023
Current derivative assets $ 84  $ 30 
Derivative assets 98  40 
Total derivative assets 182  70 
Current derivative liabilities (250) (196)
Derivative liabilities (1,213) (1,531)
Total derivative liabilities (1,463) (1,727)
Derivative liability, net $ (1,281) $ (1,657)
Derivative Net Presentation on Consolidated Balance Sheets
The following table reconciles the fair value of our derivative assets and liabilities on a gross basis, by contract, to net amounts as presented on our Consolidated Balance Sheets after offsetting for any balances with the same counterparty under master netting arrangements or other relevant netting criteria under GAAP that are met (in millions):
Liquefaction Supply Derivatives
December 31, 2024 December 31, 2023
Gross assets $ 228  $ 88 
Offsetting amounts (46) (18)
Net assets $ 182  $ 70 
Gross liabilities $ (1,464) $ (1,746)
Offsetting amounts 1  19 
Net liabilities $ (1,463) $ (1,727)