Annual report pursuant to Section 13 and 15(d)

Financial Instruments Financial Instruments (Tables)

v2.4.0.6
Financial Instruments Financial Instruments (Tables)
12 Months Ended
Dec. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table (in thousands) shows the fair value of our derivative assets and liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2012 and 2011, which are classified as other current assets, other current liabilities and other non-current liabilities in our Consolidated Balance Sheets.
 
Fair Value Measurements as of
 
December 31, 2012
 
December 31, 2011
 
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
LNG Inventory Derivatives asset
$

 
$
232

 
$

 
$
232

 
$

 
$
1,610

 
$

 
$
1,610

Fuel Derivatives liability

 
98

 

 
98

 

 
1,415

 

 
1,415

Interest Rate Derivatives liability

 
26,424

 

 
26,424

 

 

 

 

Fair Value, by Balance Sheet Grouping
Other Financial Instruments (in thousands):
 
 
December 31, 2012
 
December 31, 2011
 
 
Carrying
Amount
 
Estimated
Fair Value
 
Carrying
Amount
 
Estimated
Fair Value
2013 Notes (1)
 
$

 
$

 
$
550,000

 
$
555,500

2016 Notes, net of discount (1)
 
1,647,113

 
1,824,177

 
1,642,418

 
1,650,630

2020 Notes (1)
 
420,000

 
437,850

 

 

Liquefaction Credit Facility (2)
 
100,000

 
100,000

 

 

 
(1)
The Level 2 estimated fair value was based on quotations obtained from broker-dealers who make markets in these and similar instruments based on the closing trading prices on December 31, 2012 and 2011, as applicable.
(2)
The Level 3 estimated fair value of the Liquefaction Credit Facility as of December 31, 2012 was determined to be the carrying amount due to our ability to call this debt at anytime without penalty. 
The following table (in thousands) shows the fair value and location of our LNG Inventory Derivatives and Fuel Derivatives on our Consolidated Balance Sheets:
 
 
 
 
Fair Value Measurements as of
 
Balance Sheet Location
 
December 31, 2012
 
December 31, 2011
LNG Inventory Derivatives asset
Prepaid expenses and other
 
$
232

 
$
1,610

Fuel Derivatives liability
Other current liabilities
 
98

 
1,415

Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block]
The following table (in thousands) shows the changes in the fair value of our De-designated Interest Rate Derivatives recorded in derivative gain on our Consolidated Statements of Operations during the years ended December 31, 2012, 2011 and 2010:
 
Year Ended December 31,
 
2012
 
2011
 
2010
Interest Rate Derivatives - De-designated
$
679

 
$

 
$

The following table (in thousands) shows the changes in the fair value and settlements of our LNG Inventory Derivatives recorded in marketing and trading revenues (losses) on our Consolidated Statements of Operations during the years ended December 31, 2012, 2011 and 2010:
 
Year Ended December 31,
 
2012
 
2011
 
2010
LNG Inventory Derivatives gain
$
1,036

 
$
2,300

 
$


The following table (in thousands) shows the changes in the fair value and settlements of our Fuel Derivatives recorded in derivative gain (loss) on our Consolidated Statements of Operations during the years ended December 31, 2012, 2011 and 2010:
 
Year Ended December 31,
 
2012
 
2011
 
2010
Fuel Derivatives gain (loss)
$
(622
)
 
$
(2,251
)
 
$
461

Schedule of Notional Amounts of Outstanding Derivative Positions
At December 31, 2012, Sabine Pass Liquefaction had the following Interest Rate Derivatives outstanding that converted $20.0 million of the Liquefaction Credit Facility from a variable to a fixed interest rate. Sabine Pass Liquefaction pays a fixed interest rate on the swap and in exchange receives a variable interest rate based on the one-month LIBOR.
 
 
Initial Notional Amount
 
Maximum Notional Amount
 
Effective Date
 
Maturity Date
 
Weighted Average Fixed Interest Rate Paid
 
Variable Interest Rate Received
Interest Rate Derivatives - Designated
 
$16.1 million
 
$2.3 billion
 
August 14, 2012
 
July 31, 2019
 
1.98%
 
One-month LIBOR
Interest Rate Derivatives - De-designated
 
$3.9 million
 
$575.3 million
 
August 14, 2012
 
July 31, 2019
 
1.98%
 
One-month LIBOR
Schedule of Interest Rate Derivatives
The following table (in thousands) shows the fair value of our interest rate swaps:
 
 
 
 
Fair Value Measurements as of
 
 
Balance Sheet Location
 
December 31, 2012
 
December 31, 2011
Interest Rate Derivatives - Designated
 
Non-current derivative liabilities
 
$
21,290

 
$

Interest Rate Derivatives - De-designated
 
Non-current derivative liabilities
 
5,134

 

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)
The following table (in thousands) shows our Interest Rate Derivatives market adjustments recorded during the year ended December 31, 2012:
 
Gain (Loss) in Other Comprehensive Income
 
Gain (Loss) Reclassified from Accumulated OCI into Interest Expense (Effective Portion)
 
Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Interest Rate Derivatives - Designated
$
(21,290
)
 
$

 
$

 
$

 
$

 
$

Interest Rate Derivatives - De-designated
(5,814
)
 

 

 

 

 

Interest Rate Derivatives - Settlements
(136
)
 

 

 

 

 

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
The Company's commodity and interest rate derivatives are presented on a net basis on our Consolidated Balance Sheets as described above. The following table (in thousands) shows the fair value of our derivatives outstanding on a gross basis:
 
 
December 31, 2012
 
December 31, 2011
Commodity Derivatives:
 
 
 
 
Assets
 
$
607

 
$
1,942

Liabilities
 
474

 
1,747

Interest Rate Derivatives:
 
 
 
 
Assets - designated
 
$
17,512

 
$

Assets - de-designated
 
4,283

 

Liabilities - designated
 
38,729

 

Liabilities - de-designated
 
9,491