UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from            to            

Commission file number 001-33366

Cheniere Energy Partners, L.P.

(Exact name of registrant as specified in its charter)

Delaware	20-5913059
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

700 Milam Street, Suite 1900

Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

(713) 375-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Units Representing Limited Partner Interests	CQP	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    No ☒

As of April 30, 2021, the registrant had 484,021,123 common units outstanding.

CHENIERE ENERGY PARTNERS, L.P.

TABLE OF CONTENTS

	Definitions	1
Part I. Financial Information
Item 1.	Consolidated Financial Statements	3
	Consolidated Statements of Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Partners’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
	Note 1—Nature of Operations and Basis of Presentation	7
	Note 2—Unitholders’ Equity	7
	Note 3—Restricted Cash	8
	Note 4—Accounts and Other Receivables	8
	Note 5—Inventory	8
	Note 6—Property, Plant and Equipment	8
	Note 7—Derivative Instruments	9
	Note 8—Other Non-Current Assets	12
	Note 9—Accrued Liabilities	12
	Note 10—Debt	12
	Note 11—Revenues from Contracts with Customers	14
	Note 12—Related Party Transactions	16
	Note 13—Net Income per Common Unit	21
	Note 14—Customer Concentration	22
	Note 15—Supplemental Cash Flow Information	22
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	36
Part II. Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 6.	Exhibits	38
	Signatures	39

i

DEFINITIONS

As used in this quarterly report, the terms listed below have the following meanings: 

Common Industry and Other Terms

Bcf	billion cubic feet
Bcf/d	billion cubic feet per day
Bcf/yr	billion cubic feet per year
Bcfe	billion cubic feet equivalent
DOE	U.S. Department of Energy
EPC	engineering, procurement and construction
FERC	Federal Energy Regulatory Commission
FTA countries	countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
GAAP	generally accepted accounting principles in the United States
Henry Hub	the final settlement price (in USD per MMBtu) for the New York Mercantile Exchange’s Henry Hub natural gas futures contract for the month in which a relevant cargo’s delivery window is scheduled to begin
LIBOR	London Interbank Offered Rate
LNG	liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
MMBtu	million British thermal units, an energy unit
mtpa	million tonnes per annum
non-FTA countries	countries with which the United States does not have a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted
SEC	U.S. Securities and Exchange Commission
SPA	LNG sale and purchase agreement
TBtu	trillion British thermal units, an energy unit
Train	an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
TUA	terminal use agreement

1

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of March 31, 2021, including our ownership of certain subsidiaries, and the references to these entities used in this quarterly report:

Unless the context requires otherwise, references to “Cheniere Partners,” “the Partnership,” “we,” “us” and “our” refer to Cheniere Energy Partners, L.P. and its consolidated subsidiaries, including SPLNG, SPL and CTPL. 

2

PART I.     FINANCIAL INFORMATION

ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per unit data)

(unaudited)

	Three Months Ended March 31,
	2021		2020
Revenues
LNG revenues	$	1,669	$	1,449
LNG revenues—affiliate	214		188
Regasification revenues	67		67
Other revenues	13		14
Total revenues	1,963		1,718
Operating costs and expenses
Cost of sales (excluding items shown separately below)	948		699
Cost of sales—affiliate	42		—
Operating and maintenance expense	149		152
Operating and maintenance expense—affiliate	34		33
Operating and maintenance expense—related party	10		—
General and administrative expense	2		2
General and administrative expense—affiliate	21		25
Depreciation and amortization expense	139		138
Impairment expense and loss on disposal of assets	—		5
Total operating costs and expenses	1,345		1,054
Income from operations	618		664
Other income (expense)
Interest expense, net of capitalized interest	(217)		(234)
Loss on modification or extinguishment of debt	(54)		(1)
Other income, net	—		6
Total other expense	(271)		(229)
Net income	$	347	$	435
Basic and diluted net income per common unit	$	0.64	$	0.84
Weighted average number of common units outstanding used for basic and diluted net income per common unit calculation	484.0		348.6

The accompanying notes are an integral part of these consolidated financial statements.

3

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except unit data)

	March 31,		December 31,
	2021		2020
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	1,219	$	1,210
Restricted cash	123		97
Accounts and other receivables, net	373		318
Accounts receivable—affiliate	98		184
Advances to affiliate	127		144
Inventory	103		107
Derivative assets	16		14
Other current assets	59		61
Other current assets—affiliate	2		—
Total current assets	2,120		2,135
Property, plant and equipment, net	16,734		16,723
Operating lease assets, net	97		99
Debt issuance costs, net	16		17
Non-current derivative assets	9		11
Other non-current assets, net	177		160
Total assets	$	19,153	$	19,145
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities
Accounts payable	$	11	$	12
Accrued liabilities	704		658
Accrued liabilities—related party	3		4
Current debt	850		—
Due to affiliates	31		53
Deferred revenue	101		137
Deferred revenue—affiliate	5		1
Current operating lease liabilities	8		7
Derivative liabilities	26		11
Total current liabilities	1,739		883
Long-term debt, net	16,732		17,580
Non-current operating lease liabilities	89		90
Non-current derivative liabilities	42		35
Other non-current liabilities	—		1
Other non-current liabilities—affiliate	16		17
Partners’ equity
Common unitholders’ interest (484.0 million units issued and outstanding at both March 31, 2021 and December 31, 2020)	738		714
General partner’s interest (2% interest with 9.9 million units issued and outstanding at March 31, 2021 and December 31, 2020)	(203)		(175)
Total partners’ equity	535		539
Total liabilities and partners’ equity	$	19,153	$	19,145

The accompanying notes are an integral part of these consolidated financial statements.

4

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY

(in millions)

(unaudited)

Three Months Ended March 31, 2021
	Common Unitholders’ Interest			Subordinated Unitholder’s Interest			General Partner’s Interest			Total Partners’ Equity
	Units	Amount		Units	Amount		Units	Amount
Balance at December 31, 2020	484.0	$	714	—	$	—	9.9	$	(175)	$	539
Net income	—	340		—	—		—	7		347
Distributions
Common units, $0.655/unit	—	(316)		—	—		—	—		(316)
General partner units	—	—		—	—		—	(35)		(35)
Balance at March 31, 2021	484.0	$	738	—	$	—	9.9	$	(203)	$	535

Three Months Ended March 31, 2020
	Common Unitholders’ Interest			Subordinated Unitholder’s Interest			General Partner’s Interest			Total Partners’ Equity
	Units	Amount		Units	Amount		Units	Amount
Balance at December 31, 2019	348.6	$	1,792	135.4	$	(996)	9.9	$	(81)	$	715
Net income	—	307		—	119		—	9		435
Distributions
Common units, $0.63/unit	—	(220)		—	—		—	—		(220)
Subordinated units, $0.63/unit	—	—		—	(85)		—	—		(85)
General partner units	—	—		—	—		—	(25)		(25)
Balance at March 31, 2020	348.6	$	1,879	135.4	$	(962)	9.9	$	(97)	$	820

The accompanying notes are an integral part of these consolidated financial statements.

5

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities
Net income	$	347	$	435
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	139		138
Amortization of debt issuance costs, premium and discount	8		9
Loss on modification or extinguishment of debt	54		1
Total losses (gains) on derivatives, net	2		(21)
Net cash provided by settlement of derivative instruments	20		5
Impairment expense and loss on disposal of assets	—		5
Other	3		3
Changes in operating assets and liabilities:
Accounts and other receivables, net	(56)		38
Accounts receivable—affiliate	86		67
Advances to affiliate	18		17
Inventory	4		19
Accounts payable and accrued liabilities	24		(100)
Accrued liabilities—related party	(1)		—
Due to affiliates	(20)		(13)
Deferred revenue	(36)		(61)
Other, net	(6)		(3)
Other, net—affiliate	2		(4)
Net cash provided by operating activities	588		535
Cash flows from investing activities
Property, plant and equipment, net	(146)		(317)
Net cash used in investing activities	(146)		(317)
Cash flows from financing activities
Proceeds from issuances of debt	1,500		—
Repayments of debt	(1,500)		—
Debt issuance and other financing costs	(19)		(7)
Debt extinguishment costs	(40)		—
Distributions to owners	(351)		(330)
Other	3		—
Net cash used in financing activities	(407)		(337)
Net increase (decrease) in cash, cash equivalents and restricted cash	35		(119)
Cash, cash equivalents and restricted cash—beginning of period	1,307		1,962
Cash, cash equivalents and restricted cash—end of period	$	1,342	$	1,843

Balances per Consolidated Balance Sheets:

	March 31,
	2021
Cash and cash equivalents	$	1,219
Restricted cash	123
Total cash, cash equivalents and restricted cash	$	1,342

The accompanying notes are an integral part of these consolidated financial statements.

6

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

The Sabine Pass LNG terminal is located in Cameron Parish, Louisiana, on the Sabine-Neches Waterway less than four miles from the Gulf Coast. Through our subsidiary, SPL, we are currently operating five natural gas liquefaction Trains and are constructing one additional Train that is expected to be substantially completed in the first half of 2022, for a total production capacity of approximately 30 mtpa of LNG (the “Liquefaction Project”) at the Sabine Pass LNG terminal. Through our subsidiary, SPLNG, we own and operate regasification facilities at the Sabine Pass LNG terminal, which includes pre-existing infrastructure of five LNG storage tanks, two marine berths and vaporizers and an additional marine berth that is under construction. We also own a 94-mile pipeline through our subsidiary, CTPL, that interconnects the Sabine Pass LNG terminal with a number of large interstate pipelines (the “Creole Trail Pipeline”).

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Cheniere Partners have been prepared in accordance with GAAP for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they 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, 2020.

Results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2021.

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.

Recent Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance primarily provides temporary optional expedients which simplify the accounting for contract modifications to existing debt agreements expected to arise from the market transition from LIBOR to alternative reference rates. The optional expedients were available to be used upon issuance of this guidance but we have not yet applied the guidance because we have not yet modified any of our existing contracts for reference rate reform. Once we apply an optional expedient to a modified contract and adopt this standard, the guidance will be applied to all subsequent applicable contract modifications until December 31, 2022, at which time the optional expedients are no longer available.

NOTE 2—UNITHOLDERS’ EQUITY

The common units represent limited partner interests in us. The holders of the units are entitled to participate in partnership distributions and exercise the rights and privileges available to limited partners under our partnership agreement. Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our partnership agreement). Generally, our available cash is our cash on hand at the end of a quarter less the amount of any reserves established by our general partner. All distributions paid to date have been made from accumulated operating surplus as defined in the partnership agreement.

Although common unitholders are not obligated to fund losses of the Partnership, its capital account, which would be considered in allocating the net assets of the Partnership were it to be liquidated, continues to share in losses.

The general partner interest is entitled to at least 2% of all distributions made by us. In addition, the general partner holds incentive distribution rights (“IDRs”), which allow the general partner to receive a higher percentage of quarterly distributions of available cash from operating surplus as additional target levels are met, but may transfer these rights separately from its general partner interest. The higher percentages range from 15% to 50%, inclusive of the general partner interest.

As of March 31, 2021, our total securities beneficially owned in the form of common units were held 48.6% by Cheniere, 41.4% by BX CQP Target Holdco L.L.C. (“BX CQP Target Holdco”) and other affiliates of The Blackstone Group

7

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Inc. (“Blackstone”) and Brookfield Asset Management Inc. (“Brookfield”) and 8.0% by the public. All of our 2% general partner interest was held by Cheniere. BX CQP Target Holdco’s equity interests are 50.01% owned by BIP Chinook Holdco L.L.C., an affiliate of Blackstone and 49.99% owned by BIF IV Cypress Aggregator (Delaware) LLC, an affiliate of Brookfield. The ownership of BX CQP Target Holdco, Blackstone and Brookfield are based on their most recent filings with the SEC.

NOTE 3—RESTRICTED CASH

Restricted cash consists of funds that are contractually or legally restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents on our Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, we had $123 million and $97 million of restricted cash, respectively.

Pursuant to the accounts agreement entered into with the collateral trustee for the benefit of SPL’s debt holders, SPL is required to deposit all cash received into reserve accounts controlled by the collateral trustee.  The usage or withdrawal of such cash is restricted to the payment of liabilities related to the Liquefaction Project and other restricted payments.

NOTE 4—ACCOUNTS AND OTHER RECEIVABLES

As of March 31, 2021 and December 31, 2020, accounts and other receivables, net consisted of the following (in millions):

	March 31,		December 31,
	2021		2020
SPL trade receivable	$	349	$	300
Other accounts receivable	24		18
Total accounts and other receivables, net	$	373	$	318

NOTE 5—INVENTORY

As of March 31, 2021 and December 31, 2020, inventory consisted of the following (in millions):

	March 31,		December 31,
	2021		2020
Materials	$	82	$	81
LNG	11		8
Natural gas	9		17
Other	1		1
Total inventory	$	103	$	107

NOTE 6—PROPERTY, PLANT AND EQUIPMENT

As of March 31, 2021 and December 31, 2020, property, plant and equipment, net consisted of the following (in millions):

	March 31,		December 31,
	2021		2020
LNG terminal costs
LNG terminal and interconnecting pipeline facilities	$	16,909	$	16,908
LNG terminal construction-in-process	2,300		2,154
Accumulated depreciation	(2,481)		(2,344)
Total LNG terminal costs, net	16,728		16,718
Fixed assets
Fixed assets	30		29
Accumulated depreciation	(24)		(24)
Total fixed assets, net	6		5
Property, plant and equipment, net	$	16,734	$	16,723

8

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The following table shows depreciation expense during the three months ended March 31, 2021 and 2020 (in millions):

	Three Months Ended March 31,
	2021		2020
Depreciation expense	$	138	$	137

NOTE 7—DERIVATIVE INSTRUMENTS

We have entered into commodity derivatives consisting of natural gas supply contracts for the commissioning and operation of the Liquefaction Project (“Physical Liquefaction Supply Derivatives”) and associated economic hedges (“Financial Liquefaction Supply Derivatives,” and collectively with the Physical Liquefaction Supply Derivatives, the “Liquefaction Supply Derivatives”).

We recognize our derivative instruments as either assets or liabilities and measure those instruments at fair value. None of our derivative instruments are designated as cash flow or fair value hedging instruments, and changes in fair value are recorded within our Consolidated Statements of Income to the extent not utilized for the commissioning process.

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 March 31, 2021 and December 31, 2020, which are classified as derivative assets, non-current derivative assets, derivative liabilities or non-current derivative liabilities in our Consolidated Balance Sheets (in millions).

	Fair Value Measurements as of
	March 31, 2021								December 31, 2020
	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)	$	(4)	$	(3)	$	(36)	$	(43)	$	1	$	(1)	$	(21)	$	(21)

We value our Liquefaction Supply Derivatives using a market-based approach incorporating present value techniques, as needed, using observable commodity price curves, when available, and other relevant data.

The fair value of our Physical Liquefaction Supply Derivatives is predominantly driven by observable and unobservable market commodity prices and, as applicable to our natural gas supply contracts, our assessment of the associated events deriving fair value, including evaluating whether the respective market is available as pipeline infrastructure is developed. The fair value of our Physical Liquefaction Supply Derivatives incorporates risk premiums related to the satisfaction of conditions precedent, such as completion and placement into service of relevant pipeline infrastructure to accommodate marketable physical gas flow. As of March 31, 2021 and December 31, 2020, some of our Physical Liquefaction Supply Derivatives existed within markets for which the pipeline infrastructure was under development to accommodate marketable physical gas flow.

We include a portion of our Physical Liquefaction Supply Derivatives as Level 3 within the valuation hierarchy as the fair value is developed through the use of internal models which incorporate significant unobservable inputs. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks, such as future prices of energy units for unobservable periods, liquidity, volatility and contract duration.

9

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The Level 3 fair value measurements of natural gas positions within our Physical Liquefaction Supply Derivatives could be materially impacted by a significant change in certain natural gas prices. The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of March 31, 2021:

	Net Fair Value Liability (in millions)	Valuation Approach	Significant Unobservable Input	Range of Significant Unobservable Inputs / Weighted Average (1)
Physical Liquefaction Supply Derivatives	$(36)	Market approach incorporating present value techniques	Henry Hub basis spread	$(0.350) - $0.168 / $(0.001)

(1)    Unobservable inputs were weighted by the relative fair value of the instruments.

Increases or decreases in basis, in isolation, would decrease or increase, respectively, the fair value of our Physical Liquefaction Supply Derivatives.

The following table shows the changes in the fair value of our Level 3 Physical Liquefaction Supply Derivatives during the three months ended March 31, 2021 and 2020 (in millions):

	Three Months Ended March 31,
	2021		2020
Balance, beginning of period	$	(21)	$	24
Realized and mark-to-market gains (losses):
Included in cost of sales	(12)		25
Purchases and settlements:
Purchases	1		1
Settlements	(4)		(3)
Transfers into Level 3, net (1)	—		2
Balance, end of period	$	(36)	$	49
Change in unrealized gains (losses) relating to instruments still held at end of period	$	(12)	$	25

(1)    Transferred into Level 3 as a result of unobservable market, or out of Level 3 as a result of observable market for the underlying natural gas purchase agreements.

All counterparty derivative contracts provide for the unconditional right of set-off in the event of default. We have elected to report derivative assets and liabilities arising from our derivative contracts with the same counterparty on a net basis. The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments in instances when our derivative instruments are in an asset position. Additionally, counterparties are at risk that we will be unable to meet our commitments in instances where our derivative instruments are in a liability position. We incorporate both our own nonperformance risk and the respective counterparty’s nonperformance risk in fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of any applicable credit enhancements, such as collateral postings, set-off rights and guarantees.

Liquefaction Supply Derivatives

SPL has entered into primarily index-based physical natural gas supply contracts and associated economic hedges to purchase natural gas for the commissioning and operation of the Liquefaction Project. The remaining terms of the physical natural gas supply contracts range up to 10 years, some of which commence upon the satisfaction of certain events or states of affairs. The terms of the Financial Liquefaction Supply Derivatives range up to approximately three years.

The notional natural gas position of our Liquefaction Supply Derivatives was approximately 5,023 TBtu and 4,970 TBtu as of March 31, 2021 and December 31, 2020, respectively, of which 91 TBtu for each of the periods were for a natural gas supply contract that SPL has with a related party.

10

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The following table shows the fair value and location of our Liquefaction Supply Derivatives on our Consolidated Balance Sheets (in millions):

	Fair Value Measurements as of (1)
Consolidated Balance Sheets Location	March 31, 2021		December 31, 2020
Derivative assets	$	16	$	14
Non-current derivative assets	9		11
Total derivative assets	25		25
Derivative liabilities	(26)		(11)
Non-current derivative liabilities	(42)		(35)
Total derivative liabilities	(68)		(46)
Derivative liability, net	$	(43)	$	(21)

(1)    Does not include collateral posted with counterparties by us of $11 million and $4 million, which are included in other current assets in our Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, respectively. Includes a natural gas supply contract that SPL has with a related party, which had a fair value of zero as of both March 31, 2021 and December 31, 2020.

The following table shows the gain (loss) from changes in the fair value, settlements and location of our Liquefaction Supply Derivatives recorded on our Consolidated Statements of Income during the three months ended March 31, 2021 and 2020 (in millions):

	Consolidated Statements of Income Location (1)	Three Months Ended March 31,
		2021		2020
Liquefaction Supply Derivatives	Cost of sales	$	(2)	$	21

(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.

Consolidated Balance Sheets Presentation

Our derivative instruments are presented on a net basis on our Consolidated Balance Sheets as described above. The following table shows the fair value of our derivatives outstanding on a gross and net basis (in millions):

	Liquefaction Supply Derivatives
As of March 31, 2021
Gross assets	$	68
Offsetting amounts	(43)
Net assets	$	25
Gross liabilities	$	(76)
Offsetting amounts	8
Net liabilities	$	(68)
As of December 31, 2020
Gross assets	$	69
Offsetting amounts	(44)
Net assets	$	25
Gross liabilities	$	(48)
Offsetting amounts	2
Net liabilities	$	(46)

11

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 8—OTHER NON-CURRENT ASSETS

As of March 31, 2021 and December 31, 2020, other non-current assets, net consisted of the following (in millions):

	March 31,		December 31,
	2021		2020
Advances made to municipalities for water system enhancements	$	83	$	84
Advances and other asset conveyances to third parties to support LNG terminal	33		33
Advances made under EPC and non-EPC contracts	22		9
Tax-related prepayments and receivables	17		17
Information technology service prepayments	5		6
Other	17		11
Total other non-current assets, net	$	177	$	160

NOTE 9—ACCRUED LIABILITIES

As of March 31, 2021 and December 31, 2020, accrued liabilities consisted of the following (in millions):

	March 31,		December 31,
	2021		2020
Interest costs and related debt fees	$	226	$	203
Accrued natural gas purchases	382		374
LNG terminal and related pipeline costs	80		71
Other accrued liabilities	16		10
Total accrued liabilities	$	704	$	658

NOTE 10—DEBT

As of March 31, 2021 and December 31, 2020, our debt consisted of the following (in millions):

	March 31,		December 31,
	2021		2020
Long-term debt:
SPL — 4.200% to 6.25% senior secured notes due between March 2022 and September 2037 and working capital facility (“2020 SPL Working Capital Facility”)	$	12,797	$	13,650
Cheniere Partners — 4.000% to 5.625% senior notes due between October 2025 and March 2031 and credit facilities (“2019 CQP Credit Facilities”)	4,100		4,100
Unamortized premium, discount and debt issuance costs, net	(165)		(170)
Total long-term debt, net	16,732		17,580
Current debt:
SPL — current portion of 6.25% senior secured notes due March 2022 (“2022 SPL Senior Notes”) (1)	853		—
Unamortized premium, discount and debt issuance costs, net	(3)		—
Total current debt	850		—
Total debt, net	$	17,582	$	17,580

(1)$147 million of the 2022 SPL Senior Notes is categorized as long-term debt because the proceeds from the expected sale of approximately $147 million aggregate principal amount of 2.95% Senior Secured Notes due 2037, expected to be issued in the second half of 2021 pursuant to a note purchase agreement entered into by SPL in February 2021, are expected to be used to refinance a portion of 2022 SPL Senior Notes.

12

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Issuances and Redemptions

The following table shows the issuances and redemptions of long-term debt during the three months ended March 31, 2021 (in millions):

Issuances	Principal Amount Issued
CQP — 4.000% Senior Notes due 2031 (the “2031 CQP Senior Notes”) (1)	$	1,500
Redemptions	Amount Redeemed
CQP — 5.250% Senior Notes due 2025 (the “2025 CQP Senior Notes”) (1)	$	1,500

(1)Proceeds of the 2031 CQP Senior Notes, together with cash on hand, were used to redeem all of our outstanding 2025 CQP Senior Notes, resulting in the recognition of debt extinguishment costs of $54 million for the three months ended March 31, 2021 relating to the payment of early redemption fees and write off of unamortized debt premium and issuance costs.

Credit Facilities

Below is a summary of our credit facilities outstanding as of March 31, 2021 (in millions):

	2020 SPL Working Capital Facility (1)		2019 CQP Credit Facilities
Original facility size	$	1,200	$	1,500
Less:
Outstanding balance	—		—
Commitments prepaid or terminated	—		750
Letters of credit issued	413		—
Available commitment	$	787	$	750
Priority ranking	Senior secured		Senior secured
Interest rate on available balance	LIBOR plus 1.125% - 1.750% or base rate plus 0.125% - 0.750%		LIBOR plus 1.25% - 2.125% or base rate plus 0.25% - 1.125%
Weighted average interest rate of outstanding balance	n/a		n/a
Maturity date	March 19, 2025		May 29, 2024

(1)The 2020 SPL Working Capital Facility contains customary conditions precedent for extensions of credit, as well as customary affirmative and negative covenants. SPL pays a commitment fee equal to an annual rate of 0.1% to 0.3% (depending on the then-current rating of SPL), which accrues on the daily amount of the total commitment less the sum of (1) the outstanding principal amount of loans, (2) letters of credit issued and (3) the outstanding principal amount of swing line loans.

Restrictive Debt Covenants

The indentures governing our senior notes and other agreements underlying our debt contain customary terms and events of default and certain covenants that, among other things, may limit us and our restricted subsidiaries’ ability to make certain investments or pay dividends or distributions.

As of March 31, 2021, we and SPL were in compliance with all covenants related to our respective debt agreements.

13

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Interest Expense

Total interest expense, net of capitalized interest consisted of the following (in millions):

	Three Months Ended March 31,
	2021		2020
Total interest cost	$	247	$	254
Capitalized interest	(30)		(20)
Total interest expense, net of capitalized interest	$	217	$	234

Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our debt (in millions):

	March 31, 2021				December 31, 2020
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Senior notes — Level 2 (1)	$	16,950	$	18,680	$	16,950	$	19,113
Senior notes — Level 3 (2)	800		953		800		1,036
Credit facilities (3)	—		—		—		—

(1)The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of these senior notes and other similar instruments.

(2)The Level 3 estimated fair value was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including interest rates based on debt issued by parties with comparable credit ratings to us and inputs that are not observable in the market.

(3)The Level 3 estimated fair value approximates the principal amount because the interest rates are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty. 

NOTE 11—REVENUES FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue earned from contracts with customers during the three months ended March 31, 2021 and 2020 (in millions):

	Three Months Ended March 31,
	2021		2020
LNG revenues (1)	$	1,669	$	1,449
LNG revenues—affiliate	214		188
Regasification revenues	67		67
Other revenues	13		14
Total revenues	$	1,963	$	1,718

(1)LNG revenues include revenues for LNG cargoes in which our customers exercised their contractual right to not take delivery but remained obligated to pay fixed fees irrespective of such election. During the three months ended March 31, 2020, we recognized $16 million in LNG revenues associated with LNG cargoes for which customers notified us that they would not take delivery, which would have been recognized subsequent to March 31, 2020 had the cargoes been lifted pursuant to the delivery schedules with the customers. We did not have such revenues during the three months ended March 31, 2021. Revenue is generally recognized upon receipt of irrevocable notice that a customer will not take delivery because our customers have no contractual right to take delivery of such LNG cargo in future periods and our performance obligations with respect to such LNG cargo have been satisfied.

14

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Contract Assets

The following table shows our contract assets, net, which are classified as other current assets and other non-current assets, net on our Consolidated Balance Sheets (in millions):

	March 31,		December 31,
	2021		2020
Contract assets, net	$	1	$	—

Contract assets represent our right to consideration for transferring goods or services to the customer under the terms of a sales contract when the associated consideration is not yet due. Changes in contract assets during the three months ended March 31, 2021 were primarily attributable to revenue recognized due to the delivery of LNG under certain SPAs for which the associated consideration was not yet due.

Deferred Revenue Reconciliation

The following table reflects the changes in our contract liabilities, which we classify as deferred revenue on our Consolidated Balance Sheets (in millions):

	Three Months Ended March 31, 2021
Deferred revenues, beginning of period	$	137
Cash received but not yet recognized in revenue	101
Revenue recognized from prior period deferral	(137)
Deferred revenues, end of period	$	101

The following table reflects the changes in our contract liabilities to affiliate, which we classify as deferred revenue—affiliate on our Consolidated Balance Sheets (in millions):

	Three Months Ended March 31, 2021
Deferred revenues—affiliate, beginning of period	$	1
Cash received but not yet recognized in revenue	5
Revenue recognized from prior period deferral	(1)
Deferred revenues—affiliate, end of period	$	5

Transaction Price Allocated to Future Performance Obligations

Because many of our sales contracts have long-term durations, we are contractually entitled to significant future consideration which we have not yet recognized as revenue. The following table discloses the aggregate amount of the transaction price that is allocated to performance obligations that have not yet been satisfied as of March 31, 2021 and December 31, 2020:

	March 31, 2021			December 31, 2020
	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)
LNG revenues	$	51.4	9	$	52.1	9
LNG revenues—affiliate	0.2		3	0.1		1
Regasification revenues	2.1		5	2.1		5
Total revenues	$	53.7		$	54.3

(1)    The weighted average recognition timing represents an estimate of the number of years during which we shall have recognized half of the unsatisfied transaction price.

15

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

We have elected the following exemptions which omit certain potential future sources of revenue from the table above:

(1)We omit from the table above all performance obligations that are part of a contract that has an original expected duration of one year or less.

(2)The table above excludes substantially all variable consideration under our SPAs and TUAs. We omit from the table abov