Leases

9 Months Ended

Sep. 30, 2022

LEASES

Our leased assets consist primarily of LNG vessel time charters (“vessel charters”) and additionally include tug vessels, office space and facilities and land sites. All of our leases are classified as operating leases except for certain of our tug vessels, 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):



		September 30,		December 31,
	Consolidated Balance Sheets Location	2022		2021
Right-of-use assets—Operating	Operating lease assets	$	2,795	$	2,102
Right-of-use assets—Financing	Property, plant and equipment, net of accumulated depreciation	70		50
Total right-of-use assets		$	2,865	$	2,152

Current operating lease liabilities	Current operating lease liabilities	$	669	$	535
Current finance lease liabilities	Other current liabilities	6		2
Non-current operating lease liabilities	Operating lease liabilities	2,082		1,541
Non-current finance lease liabilities	Finance lease liabilities	75		57
Total lease liabilities		$	2,832	$	2,135

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,
		2022		2021		2022		2021
Operating lease cost (a)	Operating costs and expenses (1)	$	213	$	145	$	604	$	441
Finance lease cost:
Amortization of right-of-use assets	Depreciation and amortization expense	1		—		3		2
Interest on lease liabilities	Interest expense, net of capitalized interest	2		2		7		7

Total lease cost		$	216	$	147	$	614	$	450

(a) Included in operating lease cost:
Short-term lease costs		$	16	$	22	$	80	$	103
Variable lease costs		7		7		16		20

(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, 2022 are as follows (in millions):


Years Ending December 31,	Operating Leases (1)		Finance Leases
2022	$	193	$	4
2023	736		15
2024	651		15
2025	474		15
2026	341		15
Thereafter	763		122
Total lease payments	3,158		186
Less: Interest	(407)		(105)
Present value of lease liabilities	$	2,751	$	81

(1)Does not include approximately $2.9 billion of legally binding minimum payments primarily for vessel charters contracted for as of September 30, 2022 which will commence in future periods with fixed minimum lease terms of up to 10 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, 2022		December 31, 2021
	Operating Leases	Finance Leases	Operating Leases	Finance Leases
Weighted-average remaining lease term (in years)	6.1	13.2	5.6	16.7
Weighted-average discount rate (1)	4.0%	14.6%	3.6%	16.2%

(1)The weighted average discount rate is impacted by certain finance leases that 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,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	524	$	331
Operating cash flows from finance leases	6		7

Right-of-use assets obtained in exchange for operating lease liabilities	1,139		1,575
Right-of-use assets obtained in exchange for finance lease liabilities	23		—

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, 2022 and December 31, 2021, we had $534 million and $15 million future minimum sublease payments to be received from LNG vessel subcharters. 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,
	2022		2021		2022		2021
Fixed income	$	122	$	17	$	188	$	28
Variable income	12		15		37		21
Total sublease income	$	134	$	32	$	225	$	49