Leases

9 Months Ended

Sep. 30, 2020

LEASESOur leased assets consist primarily of (1) LNG vessel time charters (“vessel charters”), (2) tug vessels, (3) office space and facilities and (4) land sites, all of which are classified as operating leases except for our tug vessels at the Corpus Christi LNG terminal, which are classified as finance leases.

The following table shows the classification and location of our right-of-use assets and lease liabilities on our Consolidated Balance Sheets (in millions):


	Consolidated Balance Sheets Location	September 30, 2020		December 31, 2019
Right-of-use assets—Operating	Operating lease assets, net	$	630	$	439
Right-of-use assets—Financing	Property, plant and equipment, net	54		56
Total right-of-use assets		$	684	$	495

Current operating lease liabilities	Current operating lease liabilities	$	160	$	236
Current finance lease liabilities	Other current liabilities	2		1
Non-current operating lease liabilities	Non-current operating lease liabilities	473		189
Non-current finance lease liabilities	Non-current finance lease liabilities	58		58
Total lease liabilities		$	693	$	484

The following table shows the classification and location of our lease costs on our Consolidated Statements of Operations (in millions):


	Consolidated Statements of Operations Location	Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019
Operating lease cost (a)	Operating costs and expenses (1)	$	77	$	163	$	316	$	440
Finance lease cost:
Amortization of right-of-use assets	Depreciation and amortization expense	—		1		2		3
Interest on lease liabilities	Interest expense, net of capitalized interest	2		2		7		7

Total lease cost		$	79	$	166	$	325	$	450

(a) Included in operating lease cost:
Short-term lease costs		$	9	$	57	$	60	$	150
Variable lease costs paid to the lessor		3		8		12		21

(1) Presented in cost of sales, operating and maintenance expense or selling, general and administrative expense consistent with the nature of the asset under lease.

Future annual minimum lease payments for operating and finance leases as of September 30, 2020 are as follows (in millions):


Years Ending December 31,	Operating Leases (1)		Finance Leases
2020	$	74	$	3
2021	145		10
2022	109		10
2023	96		10
2024	95		10
Thereafter	284		136
Total lease payments	803		179
Less: Interest	(170)		(119)
Present value of lease liabilities	$	633	$	60

(1) Does not include $1.5 billion of legally binding minimum lease payments primarily for vessel charters which were executed as of September 30, 2020 but will commence in future period primarily in the next two years and have fixed minimum lease terms of up to seven years.

The following table shows the weighted-average remaining lease term and the weighted-average discount rate for our operating leases and finance leases:


	September 30, 2020		December 31, 2019
	Operating Leases	Finance Leases	Operating Leases	Finance Leases
Weighted-average remaining lease term (in years)	8.6	17.9	8.4	18.7
Weighted-average discount rate (1)	5.7%	16.2%	5.2%	16.2%

(1)The finance leases commenced prior to the adoption of the current leasing standard under GAAP. In accordance with previous accounting guidance, the implied rate is based on the fair value of the underlying assets.

The following table includes other quantitative information for our operating and finance leases (in millions):


	Nine Months Ended September 30,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	226	$	280
Operating cash flows from finance leases	8		6

Right-of-use assets obtained in exchange for new operating lease liabilities	412		189

LNG Vessel Subcharters

From time to time, we sublease certain LNG vessels under charter to third parties while retaining our existing obligation to the original lessor. As of September 30, 2020 and December 31, 2019, we had zero and $9 million in future minimum sublease payments to be received from LNG vessel subcharters, respectively, which will be recognized entirely within 2020. The following table shows the sublease income recognized in other revenues on our Consolidated Statements of Operations (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Fixed Income	$	9	$	23	$	61	$	81
Variable Income	1		5		24		15
Total sublease income	$	10	$	28	$	85	$	96