Leases

6 Months Ended

Jun. 30, 2023

LEASES

Our leased assets consist primarily of LNG vessels leased under 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 vessel charters and 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):



		June 30,		December 31,
	Consolidated Balance Sheets Location	2023		2022
Right-of-use assets—Operating	Operating lease assets	$	2,487	$	2,625
Right-of-use assets—Financing	Property, plant and equipment, net of accumulated depreciation	491		511
Total right-of-use assets		$	2,978	$	3,136

Current operating lease liabilities	Current operating lease liabilities	$	598	$	616
Current finance lease liabilities	Other current liabilities	32		28
Non-current operating lease liabilities	Operating lease liabilities	1,863		1,971
Non-current finance lease liabilities	Finance lease liabilities	483		494
Total lease liabilities		$	2,976	$	3,109

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 June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
Operating lease cost (a)	Operating costs and expenses (1)	$	185	$	189	$	398	$	391
Finance lease cost:
Amortization of right-of-use assets	Depreciation and amortization expense	11		1		24		2
Interest on lease liabilities	Interest expense, net of capitalized interest	7		3		16		5

Total lease cost		$	203	$	193	$	438	$	398

(a) Included in operating lease cost:
Short-term lease costs		$	2	$	23	$	25	$	64
Variable lease costs		2		—		14		9

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

Future annual minimum lease payments for operating and finance leases as of June 30, 2023 are as follows (in millions):


Years Ending December 31,	Operating Leases		Finance Leases
2023	$	338	$	32
2024	674		66
2025	554		71
2026	421		75
2027	324		77
Thereafter	524		427
Total lease payments (1)	2,835		748
Less: Interest	(374)		(233)
Present value of lease liabilities	$	2,461	$	515

(1)Does not include approximately $4.4 billion of legally binding minimum payments primarily for vessel charters executed as of June 30, 2023, but will commence in future periods with fixed minimum lease terms of up to 15 years.

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


	June 30, 2023		December 31, 2022
	Operating Leases	Finance Leases	Operating Leases	Finance Leases
Weighted-average remaining lease term (in years)	5.7	10.2	5.9	10.6
Weighted-average discount rate (1)	4.3%	7.7%	4.2%	7.8%

(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):


	Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	359	$	324
Operating cash flows from finance leases	18		5
Financing cash flows from finance leases	13		—
Right-of-use assets obtained in exchange for operating lease liabilities	177		433
Right-of-use assets obtained in exchange for finance lease liabilities	5		—

LNG Vessel Subcharters

We sublease certain LNG vessels under charter to third parties while retaining our existing obligation to the original lessor. All of our sublease arrangements have been assessed as operating leases. The following table shows the sublease income recognized in other revenues on our Consolidated Statements of Operations (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Fixed income	$	97	$	34	$	231	$	66
Variable income	13		6		36		25
Total sublease income	$	110	$	40	$	267	$	91

Future annual minimum sublease payments to be received from LNG vessel subcharters as of June 30, 2023 are as follows (in millions):


Years Ending December 31,	Sublease Payments
2023	$	140
2024	108
2025	—
2026	—
2027	—
Thereafter	—
Total sublease payments	$	248