Quarterly report [Sections 13 or 15(d)]

Derivative Instruments (Tables)

v3.25.1
Derivative Instruments (Tables)
 3 Months Ended
Mar. 31, 2025
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
March 31, 2025 December 31, 2024
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)
 $ —  $ (2) $ (1,275) $ (1,277) $ —  $ 26  $ (1,307) $ (1,281)
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 March 31, 2025:
Net Fair Value Liability
(in millions)
 Valuation Approach Significant Unobservable Input Range of Significant Unobservable Inputs / Weighted Average (1)
Liquefaction Supply Derivatives $(1,275) Market approach incorporating present value techniques
Henry Hub basis spread
$(0.590) - $0.265 / $0.016
Option pricing model
International LNG pricing spread, relative to Henry Hub (2)
103% - 374% / 196%
(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):
Three Months Ended March 31,
2025 2024
Balance, beginning of period $ (1,307) $ (1,676)
Realized and change in fair value gains (losses) included in net income (1):
Included in cost of sales, existing deals (2) (28) (2)
Included in cost of sales, new deals (3) 14  9 
Purchases and settlements:
Purchases (4) —  — 
Settlements (5) 46  34 
Transfers out of level 3 (6) —  — 
Balance, end of period $ (1,275) $ (1,635)
Favorable (unfavorable) changes in fair value relating to instruments still held at the end of the period
 $ (14) $ 7 
(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.
(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)
 Three Months Ended March 31,
2025 2024
Cost of sales $ (18) $ 55 
(1)Does not include the realized value associated with the Liquefaction Supply Derivatives that settle through physical delivery. Fair value fluctuations associated with our 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 March 31, 2025 December 31, 2024
Current derivative assets $ 25  $ 84 
Derivative assets 29  98 
Total derivative assets 54  182 
Current derivative liabilities (154) (250)
Derivative liabilities (1,177) (1,213)
Total derivative liabilities (1,331) (1,463)
Derivative liability, net $ (1,277) $ (1,281)
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 (in millions):
Liquefaction Supply Derivatives
March 31, 2025 December 31, 2024
Gross assets $ 114  $ 228 
Offsetting amounts (60) (46)
Net assets $ 54  $ 182 
Gross liabilities $ (1,351) $ (1,464)
Offsetting amounts 20  1 
Net liabilities $ (1,331) $ (1,463)