Quarterly report [Sections 13 or 15(d)]

Nature of Operations and Basis of Presentation (Policies)

v3.26.1
Nature of Operations and Basis of Presentation (Policies)
 6 Months Ended
Jun. 30, 2026
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation, Policy
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, these Consolidated Financial Statements 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, 2025.

Results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2026.
Income Taxes, Policy
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.
Accounting for Derivative Instruments
Accounting for Derivative Instruments

In June 2026, we designated the NPNS scope exception under Accounting Standards Codification Topic 815, Derivatives and Hedging, for our IPM agreements. This exception is available for contracts that are expected to be physically settled and used or sold in the normal course of business, which is consistent with our intended purpose to consume the delivered physical natural gas to produce LNG. Our designation considered increased observable U.S. Gulf Coast third-party physical natural gas market activity involving contracts indexed to global LNG or natural gas prices, among other factors, in evaluating whether the pricing mechanism is consistent with the economics of the underlying physical market. As a result of this designation, these agreements are no longer accounted for as derivative instruments that are measured at fair value on a recurring basis. Instead, the agreements are accounted for on a delivery basis upon physical receipt of the natural gas. The estimated fair values of these agreements as of the designation date were established as the new cost basis and are being amortized into cost of sales on a systematic basis over the remaining expected terms of the agreements. Because recognition is based on the timing and volume of contract deliveries, the amounts recognized in any reporting period are expected to vary and are not expected to follow a linear pattern. These non-cash amounts reflect the amortization of deferred gains and losses established at the designation date rather than changes in current-period market prices. If it is determined that the contracts designated as NPNS no longer meet the
scope exception, the contracts would be recorded at fair value and any gains and losses would be immediately recognized in earnings.

As a result of the designation, the carrying amounts of the NPNS-designated agreements were reclassified on our Consolidated Balance Sheets from other current assets, derivative assets, current derivative liabilities and derivative liabilities as follows (in millions):

New Consolidated Balance Sheet Location Amount Reclassified
Deferred NPNS assets $ 669 
Current portion of deferred NPNS liabilities (108)
Deferred NPNS liabilities (1,081)
Total deferred NPNS assets and liabilities $ (520)

The following table presents management’s current estimated net gains from the amortization of the remaining balance of the deferred NPNS assets and liabilities as of the designation date (in millions), which is based on estimated recognition periods of contractual delivery schedules as of the balance sheet date and may change if contract volumes, delivery timing, or contract modifications differ from current expectations:

Years Ending December 31, Estimated gain from amortization of deferred NPNS assets and liabilities
2026 (1) $ 57 
2027 103 
2028 103 
2029 88 
2030 58 
Thereafter 111 
Total estimated amortization $ 520 
(1)For the six months ended June 30, 2026, we recorded a gain from amortization of $5 million.
Prior to the designation date, we recognized $551 million and $(126) million of derivative gains (losses) during the three and six months ended June 30, 2026, respectively, and derivative gains of $39 million and $188 million for the same periods of 2025, respectively, for the designated agreements.
Recent Accounting Standards
Recent Accounting Standards

ASU 2024-03

In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as clarified by ASU No. 2025-01 in January 2025. This guidance requires disaggregated disclosures about certain income statement expense line items on an annual and interim basis. We continue to evaluate the impact of the provisions of this guidance on our disclosures, but plan to adopt this guidance prospectively and conform with the disclosure requirements when it becomes mandatorily effective for our annual report for the year ending December 31, 2027.