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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 September 30, 2020
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 001-16383
LNG-20200930_G1.GIF
CHENIERE ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4352386
(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 Stock, $ 0.003 par value LNG 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 October 30, 2020, the issuer had 252,274,015 shares of Common Stock outstanding.



CHENIERE ENERGY, INC.
TABLE OF CONTENTS


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 September 30, 2020, including our ownership of certain subsidiaries, and the references to these entities used in this quarterly report:
LNG-20200930_G2.JPG
Unless the context requires otherwise, references to “Cheniere,” the “Company,” “we,” “us” and “our” refer to Cheniere Energy, Inc. and its consolidated subsidiaries, including our publicly traded subsidiary, Cheniere Partners.
Unless the context requires otherwise, references to the “CCH Group” refer to CCH HoldCo II, CCH HoldCo I, CCH, CCL and CCP, collectively.

2


PART I.    FINANCIAL INFORMATION 
ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS
CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (1)
(in millions, except share data)


September 30, December 31,
2020 2019
ASSETS (unaudited)  
Current assets    
Cash and cash equivalents $ 2,091  $ 2,474 
Restricted cash 522  520 
Accounts and other receivables, net 390  491 
Inventory 280  312 
Derivative assets 195  323 
Other current assets 154  92 
Total current assets 3,632  4,212 
Property, plant and equipment, net 30,201  29,673 
Operating lease assets, net 630  439 
Non-current derivative assets 592  174 
Goodwill 77  77 
Deferred tax assets 414  529 
Other non-current assets, net 385  388 
Total assets $ 35,931  $ 35,492 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities    
Accounts payable $ 41  $ 66 
Accrued liabilities 1,006  1,281 
Current debt 338  — 
Deferred revenue 179  161 
Current operating lease liabilities 160  236 
Derivative liabilities 164  117 
Other current liabilities 29  13 
Total current liabilities 1,917  1,874 
Long-term debt, net 30,949  30,774 
Non-current operating lease liabilities 473  189 
Non-current finance lease liabilities 58  58 
Non-current derivative liabilities 173  151 
Other non-current liabilities 14  11 
Commitments and contingencies (see Note 18)
Stockholders’ equity    
Preferred stock, $0.0001 par value, 5.0 million shares authorized, none issued
—  — 
Common stock, $0.003 par value, 480.0 million shares authorized
Issued: 273.0 million shares at September 30, 2020 and 270.7 million shares at December 31, 2019
Outstanding: 252.2 million shares at September 30, 2020 and 253.6 million shares at December 31, 2019
Treasury stock: 20.8 million shares and 17.1 million shares at September 30, 2020 and December 31, 2019, respectively, at cost
(872) (674)
Additional paid-in-capital 4,246  4,167 
Accumulated deficit (3,399) (3,508)
Total stockholders' deficit (24) (14)
Non-controlling interest 2,371  2,449 
Total equity 2,347  2,435 
Total liabilities and stockholders’ equity $ 35,931  $ 35,492 
(1)     Amounts presented include balances held by our consolidated variable interest entity (“VIE”), Cheniere Partners, as further discussed in Note 8— Non-controlling Interest and Variable Interest Entity. As of September 30, 2020, total assets and liabilities of Cheniere Partners, which are included in our Consolidated Balance Sheets, were $18.8 billion and $18.5 billion, respectively, including $1.3 billion of cash and cash equivalents and $0.2 billion of restricted cash.
The accompanying notes are an integral part of these consolidated financial statements.

3



CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Revenues
LNG revenues $ 1,373  $ 2,059  $ 6,236  $ 6,375 
Regasification revenues 67  66  202  199 
Other revenues 20  45  133  149 
Total revenues 1,460  2,170  6,571  6,723 
Operating costs and expenses
Cost of sales (excluding items shown separately below) 768  1,267  2,295  3,758 
Operating and maintenance expense 317  308  988  824 
Development expense — 
Selling, general and administrative expense 70  72  224  222 
Depreciation and amortization expense 233  213  699  561 
Impairment expense and loss on disposal of assets — 
Total operating costs and expenses 1,388  1,863  4,216  5,378 
Income from operations 72  307  2,355  1,345 
Other expense
Interest expense, net of capitalized interest (355) (395) (1,174) (1,014)
Loss on modification or extinguishment of debt (171) (27) (215) (27)
Interest rate derivative loss, net —  (78) (233) (187)
Other expense, net (129) (70) (115) (38)
Total other expense (655) (570) (1,737) (1,266)
Income (loss) before income taxes and non-controlling interest (583) (263) 618  79 
Income tax benefit (provision) 75  (119) — 
Net income (loss) (508) (260) 499  79 
Less: net income (loss) attributable to non-controlling interest (45) 58  390  370 
Net income (loss) attributable to common stockholders $ (463) $ (318) $ 109  $ (291)
Net income (loss) per share attributable to common stockholders—basic and diluted (1) $ (1.84) $ (1.25) $ 0.43  $ (1.13)
Weighted average number of common shares outstanding—basic 252.2  256.0  252.5  256.8 
Weighted average number of common shares outstanding—diluted 252.2  256.0  253.2  256.8 
(1)     Earnings per share in the table may not recalculate exactly due to rounding because it is calculated based on whole numbers, not the rounded numbers presented.

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

4



CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
Three and Nine Months Ended September 30, 2020
Total Stockholders’ Equity
  Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Non-controlling Interest Total
Equity
  Shares Par Value Amount Shares Amount
Balance at December 31, 2019 253.6  $ 17.1  $ (674) $ 4,167  $ (3,508) $ 2,449  $ 2,435 
Vesting of restricted stock units and performance stock units 2.1  —  —  —  —  —  —  — 
Share-based compensation —  —  —  —  29  —  —  29 
Issued shares withheld from employees related to share-based compensation, at cost (0.7) —  0.7  (39) —  —  —  (39)
Shares repurchased, at cost (2.9) —  2.9  (155) —  —  —  (155)
Net income attributable to non-controlling interest —  —  —  —  —  —  228  228 
Distributions and dividends to non-controlling interest —  —  —  —  —  —  (154) (154)
Net income —  —  —  —  —  375  —  375 
Balance at March 31, 2020 252.1  20.7  (868) 4,196  (3,133) 2,523  2,719 
Vesting of restricted stock units and performance stock units 0.1  —  —  —  —  —  —  — 
Share-based compensation —  —  —  —  31  —  —  31 
Issued shares withheld from employees related to share-based compensation, at cost —  —  —  (2) —  —  —  (2)
Net income attributable to non-controlling interest —  —  —  —  —  —  207  207 
Distributions and dividends to non-controlling interest —  —  —  —  —  —  (156) (156)
Net income —  —  —  —  —  197  —  197 
Balance at June 30, 2020 252.2  20.7  (870) 4,227  (2,936) 2,574  2,996 
Vesting of restricted stock units and performance stock units 0.1  —  —  —  —  —  —  — 
Share-based compensation —  —  —  —  26  —  —  26 
Issued shares withheld from employees related to share-based compensation, at cost (0.1) —  0.1  (2) —  —  —  (2)
Net loss attributable to non-controlling interest —  —  —  —  —  —  (45) (45)
Reacquisition of equity component of convertible notes, net of tax —  —  —  —  (7) —  —  (7)
Distributions and dividends to non-controlling interest —  —  —  —  —  —  (158) (158)
Net loss —  —  —  —  —  (463) —  (463)
Balance at September 30, 2020 252.2  $ 20.8  $ (872) $ 4,246  $ (3,399) $ 2,371  $ 2,347 
    
The accompanying notes are an integral part of these consolidated financial statements.

5



CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED
(in millions)
(unaudited)
Three and Nine Months Ended September 30, 2019
Total Stockholders’ Equity
  Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Non-controlling Interest Total
Equity
  Shares Par Value Amount Shares Amount
Balance at December 31, 2018 257.0  $ 12.8  $ (406) $ 4,035  $ (4,156) $ 2,455  $ 1,929 
Vesting of restricted stock units 0.6  —  —  —  —  —  —  — 
Share-based compensation —  —  —  —  28  —  —  28 
Issued shares withheld from employees related to share-based compensation, at cost (0.2) —  0.2  (12) —  —  —  (12)
Net income attributable to non-controlling interest —  —  —  —  —  —  196  196 
Distributions and dividends to non-controlling interest —  —  —  —  —  —  (144) (144)
Net income —  —  —  —  —  141  —  141 
Balance at March 31, 2019 257.4  13.0  (418) 4,063  (4,015) 2,507  2,138 
Vesting of restricted stock units 0.1  —  —  —  —  —  —  — 
Share-based compensation —  —  —  —  33  —  —  33 
Issued shares withheld from employees related to share-based compensation, at cost —  —  —  (2) —  —  —  (2)
Shares repurchased, at cost —  —  —  (3) —  —  —  (3)
Net income attributable to non-controlling interest —  —  —  —  —  —  116  116 
Equity portion of convertible notes, net —  —  —  —  —  — 
Distributions and dividends to non-controlling interest —  —  —  —  —  —  (146) (146)
Net loss —  —  —  —  —  (114) —  (114)
Balance at June 30, 2019 257.5  13.0  (423) 4,097  (4,129) 2,477  2,023 
Vesting of restricted stock units 0.1  —  —  —  —  —  —  — 
Share-based compensation —  —  —  —  33  —  —  33 
Issued shares withheld from employees related to share-based compensation, at cost (0.1) —  0.1  (5) —  —  —  (5)
Shares repurchased, at cost (2.5) —  2.5  (156) —  —  —  (156)
Net income attributable to non-controlling interest —  —  —  —  —  —  58  58 
Distributions and dividends to non-controlling interest —  —  —  —  —  —  (149) (149)
Net loss —  —  —  —  —  (318) —  (318)
Balance at September 30, 2019 255.0  $ 15.6  $ (584) $ 4,130  $ (4,447) $ 2,386  $ 1,486 

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

6



CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Nine Months Ended September 30,
2020 2019
Cash flows from operating activities
Net income $ 499  $ 79 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 699  561 
Share-based compensation expense 84  94 
Non-cash interest expense 43  122 
Amortization of debt issuance costs, premium and discount 94  71 
Non-cash operating lease costs 222  251 
Loss on modification or extinguishment of debt 215  27 
Total losses (gains) on derivatives, net (282) 22 
Net cash provided by settlement of derivative instruments 61  108 
Impairment expense and loss on disposal of assets
Impairment or loss on equity method investments 130  88 
Deferred taxes 115  (2)
Repayment of paid-in-kind interest related to repurchase of convertible notes (911) — 
Other — 
Changes in operating assets and liabilities:
Accounts and other receivables, net 101  (5)
Inventory 31  35 
Other current assets (27) (45)
Accounts payable and accrued liabilities (93) (82)
Deferred revenue 18  33 
Operating lease liabilities (205) (263)
Finance lease liabilities — 
Other, net (36) (10)
Net cash provided by operating activities 765  1,092 
Cash flows from investing activities
Property, plant and equipment, net (1,437) (2,587)
Investment in equity method investment (100) (70)
Other (8) (1)
Net cash used in investing activities (1,545) (2,658)
Cash flows from financing activities
Proceeds from issuances of debt 7,683  4,420 
Repayments of debt (6,324) (2,237)
Debt issuance and other financing costs (124) (38)
Debt modification or extinguishment costs (170) (4)
Distributions and dividends to non-controlling interest (468) (439)
Payments related to tax withholdings for share-based compensation (43) (19)
Repurchase of common stock (155) (159)
Other — 
Net cash provided by financing activities 399  1,527 
Net decrease in cash, cash equivalents and restricted cash (381) (39)
Cash, cash equivalents and restricted cash—beginning of period 2,994  3,156 
Cash, cash equivalents and restricted cash—end of period $ 2,613  $ 3,117 
Balances per Consolidated Balance Sheet:
September 30,
2020
Cash and cash equivalents $ 2,091 
Restricted cash 522 
Total cash, cash equivalents and restricted cash $ 2,613 
The accompanying notes are an integral part of these consolidated financial statements.

7


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

We are operating and constructing two natural gas liquefaction and export facilities at Sabine Pass and Corpus Christi. The Sabine Pass LNG terminal is located in Cameron Parish, Louisiana, on the Sabine-Neches Waterway less than four miles from the Gulf Coast. Cheniere Partners, through its subsidiary SPL, is currently operating five natural gas liquefaction Trains and is constructing one additional Train for a total production capacity of approximately 30 mtpa of LNG (the “SPL Project”) at the Sabine Pass LNG terminal. The Sabine Pass LNG terminal has operational regasification facilities owned by Cheniere Partners’ subsidiary, SPLNG, that include pre-existing infrastructure of five LNG storage tanks, two marine berths and vaporizers and an additional marine berth that is under construction. Cheniere Partners also owns a 94-mile pipeline that interconnects the Sabine Pass LNG terminal with a number of large interstate pipelines (the “Creole Trail Pipeline”) through its subsidiary, CTPL. As of September 30, 2020, we owned 100% of the general partner interest and 48.6% of the limited partner interest in Cheniere Partners.

The Corpus Christi LNG terminal is located near Corpus Christi, Texas and is operated and constructed by our subsidiary, CCL. We are currently operating two Trains and one additional Train is undergoing commissioning for a total production capacity of approximately 15 mtpa of LNG. We also operate a 23-mile natural gas supply pipeline that interconnects the Corpus Christi LNG terminal with several interstate and intrastate natural gas pipelines (the “Corpus Christi Pipeline” and together with the Trains, the “CCL Project”) through our subsidiary, CCP. The CCL Project, once fully constructed, will contain three LNG storage tanks and two marine berths.

Additionally, separate from the CCH Group, we are developing an expansion of the Corpus Christi LNG terminal adjacent to the CCL Project (“Corpus Christi Stage 3”) through our subsidiary CCL Stage III, for up to seven midscale Trains with an expected total production capacity of approximately 10 mtpa of LNG. We received approval from FERC in November 2019 to site, construct and operate the expansion project.

We remain focused on operational excellence and customer satisfaction. Increasing demand of LNG has allowed us to expand our liquefaction infrastructure in a financially disciplined manner. We hold significant land positions at both the Sabine Pass LNG terminal and the Corpus Christi LNG terminal which provide opportunity for further liquefaction capacity expansion. The development of these sites or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before we make a final investment decision (“FID”).

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Cheniere 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, 2019.

Results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2020.

Recent Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This guidance simplifies the accounting for convertible instruments primarily by eliminating the existing cash conversion and beneficial conversion models within Subtopic 470-20, which will result in fewer embedded conversion options being accounted for separately from the debt host. The guidance also amends and simplifies the calculation of earnings per share relating to convertible instruments. This guidance is effective for annual periods beginning after December 15, 2021, including interim periods within that reporting period, with earlier adoption permitted for fiscal years beginning after December 15, 2020,
8


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
including interim periods within that reporting period, using either a full or modified retrospective approach. We are currently evaluating the impact of the provisions of this guidance on our Consolidated Financial Statements and related disclosures.

In March 2020, the FASB issued 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—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 September 30, 2020 and December 31, 2019, restricted cash consisted of the following (in millions):
September 30, December 31,
2020 2019
Current restricted cash
SPL Project $ 157  $ 181 
CCL Project 145  80 
Cash held by our subsidiaries restricted to Cheniere 220  259 
Total current restricted cash $ 522  $ 520 
Pursuant to the accounts agreements entered into with the collateral trustees for the benefit of SPL’s debt holders and CCH’s debt holders, SPL and CCH are required to deposit all cash received into reserve accounts controlled by the collateral trustees.  The usage or withdrawal of such cash is restricted to the payment of liabilities related to the SPL Project and the CCL Project (collectively, the “Liquefaction Projects”) and other restricted payments. The majority of the cash held by our subsidiaries restricted to Cheniere relates to advance funding for operation and construction needs of the Liquefaction Projects.

NOTE 3—ACCOUNTS AND OTHER RECEIVABLES

As of September 30, 2020 and December 31, 2019, accounts and other receivables, net consisted of the following (in millions):
September 30, December 31,
2020 2019
Trade receivables
SPL and CCL $ 249  $ 328 
Cheniere Marketing 41  113 
Other accounts receivable 100  50 
Total accounts and other receivables, net $ 390  $ 491 

9


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
NOTE 4—INVENTORY

As of September 30, 2020 and December 31, 2019, inventory consisted of the following (in millions):
September 30, December 31,
2020 2019
Natural gas $ 21  $ 16 
LNG 45  67 
LNG in-transit 69  93 
Materials and other 145  136 
Total inventory $ 280  $ 312 

NOTE 5—PROPERTY, PLANT AND EQUIPMENT
 
As of September 30, 2020 and December 31, 2019, property, plant and equipment, net consisted of the following (in millions):
September 30, December 31,
2020 2019
LNG terminal costs    
LNG terminal and interconnecting pipeline facilities $ 27,435  $ 27,305 
LNG site and related costs 324  322 
LNG terminal construction-in-process 4,977  3,903 
Accumulated depreciation (2,716) (2,049)
Total LNG terminal costs, net 30,020  29,481 
Fixed assets and other    
Computer and office equipment 25  23 
Furniture and fixtures 19  22 
Computer software 115  110 
Leasehold improvements 47  42 
Land 59  59 
Other 24  21 
Accumulated depreciation (162) (141)
Total fixed assets and other, net 127  136 
Assets under finance lease
Tug vessels 60  60 
Accumulated depreciation (6) (4)
Total assets under finance lease, net 54  56 
Property, plant and equipment, net $ 30,201  $ 29,673 

The following table shows depreciation expense and offsets to LNG terminal costs during the three and nine months ended September 30, 2020 and 2019 (in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Depreciation expense $ 231  $ 211  $ 694  $ 557 
Offsets to LNG terminal costs (1) —  99 —  301
(1)    We realize offsets to LNG terminal costs related to the sale of commissioning cargoes because these amounts were earned or loaded prior to the start of commercial operations of the respective Trains of the Liquefaction Projects during the testing phase for its construction.

10


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
NOTE 6—DERIVATIVE INSTRUMENTS
 
We have entered into the following derivative instruments that are reported at fair value:
interest rate swaps (“CCH Interest Rate Derivatives”) to hedge the exposure to volatility in a portion of the floating-rate interest payments on CCH’s amended and restated credit facility (the “CCH Credit Facility”) and to hedge against changes in interest rates that could impact anticipated future issuance of debt by CCH (“CCH Interest Rate Forward Start Derivatives” and, collectively with the CCH Interest Rate Derivatives, the “Interest Rate Derivatives”);
commodity derivatives consisting of natural gas supply contracts for the commissioning and operation of the Liquefaction Projects and potential future development of Corpus Christi Stage 3 (“Physical Liquefaction Supply Derivatives”) and associated economic hedges (collectively, the “Liquefaction Supply Derivatives”);
financial derivatives to hedge the exposure to the commodity markets in which we have contractual arrangements to purchase or sell physical LNG (“LNG Trading Derivatives”); and
foreign currency exchange (“FX”) contracts to hedge exposure to currency risk associated with both LNG Trading Derivatives and operations in countries outside of the United States (“FX 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 Operations 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 September 30, 2020 and December 31, 2019, 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
September 30, 2020 December 31, 2019
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
CCH Interest Rate Derivatives liability $ —  $ (165) $ —  $ (165) $ —  $ (81) $ —  $ (81)
CCH Interest Rate Forward Start Derivatives liability —  —  —  —  —  (8) —  (8)
Liquefaction Supply Derivatives asset (liability) (7) (5) 533  521  138  149 
LNG Trading Derivatives asset 12  80  —  92  —  165  —  165 
FX Derivatives asset —  —  —  — 

We value our Interest Rate Derivatives using an income-based approach utilizing observable inputs to the valuation model including interest rate curves, risk adjusted discount rates, credit spreads and other relevant data. We value our LNG Trading Derivatives and our Liquefaction Supply Derivatives using a market or option-based approach incorporating present value techniques, as needed, using observable commodity price curves, when available, and other relevant data. We value our FX Derivatives with a market approach using observable FX rates 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 September 30, 2020 and December 31, 2019, some of our Physical Liquefaction Supply Derivatives existed within markets for which the pipeline infrastructure was under development to accommodate marketable physical gas flow.
11


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
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.

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 and international LNG prices. The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of September 30, 2020:
Net Fair Value Asset
(in millions)
Valuation Approach Significant Unobservable Input Range of Significant Unobservable Inputs / Weighted Average (1)
Physical Liquefaction Supply Derivatives $533 Market approach incorporating present value techniques Henry Hub basis spread
$(0.557) - $0.055 / $(0.030)
Option pricing model International LNG pricing spread, relative to Henry Hub (2)
56% - 173% / 137%
(1)Unobservable inputs were weighted by the relative fair value of the instruments.
(2)Spread contemplates U.S. dollar-denominated pricing.

Increases or decreases in basis or pricing spreads, 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 and nine months ended September 30, 2020 and 2019 (in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Balance, beginning of period $ 590  $ 89  $ 138  $ (29)
Realized and mark-to-market gains (losses):
Included in cost of sales (27) (137) 454  (139)
Purchases and settlements:
Purchases 17  93 
Settlements (31) —  (61) 44 
Balance, end of period $ 533  $ (31) $ 533  $ (31)
Change in unrealized gains (losses) relating to instruments still held at end of period $ (27) $ (137) $ 454  $ (139)

Derivative assets and liabilities arising from our derivative contracts with the same counterparty are reported on a net basis, as all counterparty derivative contracts provide for the unconditional right of set-off in the event of default. 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.

12


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
Interest Rate Derivatives

In August 2020, we settled the outstanding CCH Interest Rate Forward Start Derivatives used to hedge against changes in the interest rates of CCH’s debt.

As of September 30, 2020, we had the following Interest Rate Derivatives outstanding:
Notional Amounts
September 30, 2020 December 31, 2019 Maturity Date Weighted Average Fixed Interest Rate Paid Variable Interest Rate Received
CCH Interest Rate Derivatives $4.7 billion $4.5 billion May 31, 2022 2.30% One-month LIBOR

The following table shows the fair value and location of the Interest Rate Derivatives on our Consolidated Balance Sheets (in millions):
September 30, 2020 December 31, 2019
CCH Interest Rate Derivatives CCH Interest Rate Forward Start Derivatives Total CCH Interest Rate Derivatives CCH Interest Rate Forward Start Derivatives Total
Consolidated Balance Sheets Location
Derivative liabilities $ (99) $ —  $ (99) $ (32) $ (8) $ (40)
Non-current derivative liabilities (66) —  (66) (49) —  (49)
Total derivative liabilities $ (165) $ —  $ (165) $ (81) $ (8) $ (89)

The following table shows the changes in the fair value and settlements of our Interest Rate Derivatives recorded in interest rate derivative loss, net on our Consolidated Statements of Operations during the three and nine months ended September 30, 2020 and 2019 (in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
CCH Interest Rate Derivatives loss $ —  $ (17) $ (138) $ (119)
CCH Interest Rate Forward Start Derivatives loss —  (61) (95) (68)

Commodity Derivatives

SPL, CCL and CCL Stage III have entered into physical natural gas supply contracts and associated economic hedges to purchase natural gas for the commissioning and operation of the Liquefaction Projects and potential future development of Corpus Christi Stage 3, respectively, which are primarily indexed to the natural gas market and international LNG indices. The remaining terms of the index-based physical natural gas supply contracts range up to approximately 15 years, some of which commence upon the satisfaction of certain events or states of affairs.

We have entered into, and may from time to time enter into, financial LNG Trading Derivatives in the form of swaps, forwards, options or futures to economically hedge exposure to the commodity markets in which we have contractual arrangements to purchase or sell physical LNG. We have entered into LNG Trading Derivatives to secure a fixed price position to minimize future cash flow variability associated with LNG purchase and sale transactions.

13


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
The following table shows the fair value and location of our Liquefaction Supply Derivatives and LNG Trading Derivatives (collectively, “Commodity Derivatives”) on our Consolidated Balance Sheets (in millions, except notional amount):
September 30, 2020 December 31, 2019
Liquefaction Supply Derivatives (1) LNG Trading Derivatives (2) Total Liquefaction Supply Derivatives (1) LNG Trading Derivatives (2) Total
Consolidated Balance Sheets Location
Derivative assets $ 96  $ 91  $ 187  $ 93  $ 225  $ 318 
Non-current derivative assets 584  592  174  —  174 
Total derivative assets 680  99  779  267  225  492 
Derivative liabilities (53) (7) (60) (16) (60) (76)
Non-current derivative liabilities (106) —  (106) (102) —  (102)
Total derivative liabilities (159) (7) (166) (118) (60) (178)
Derivative asset, net $ 521  $ 92  $ 613  $ 149  $ 165  $ 314 
Notional amount, net (in TBtu) (3) 8,818  9,177 
(1)    Does not include collateral posted with counterparties by us of $20 million and $7 million for such contracts, which are included in other current assets in our Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively. Includes derivative assets for natural gas supply contracts that SPL and CCL have with related parties. See Note 13Related Party Transactions.
(2)    Does not include collateral posted with counterparties by us of zero and $5 million deposited for such contracts, which are included in other current assets in our Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively.
(3)    Includes notional amounts for natural gas supply contracts that SPL and CCL have with related parties. See Note 13—Related Party Transactions.

The following table shows the changes in the fair value, settlements and location of our Commodity Derivatives recorded on our Consolidated Statements of Operations during the three and nine months ended September 30, 2020 and 2019 (in millions):
Consolidated Statements of Operations Location (1) Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
LNG Trading Derivatives gain LNG revenues $ 13  $ 22  $ 119  $ 180 
LNG Trading Derivatives loss Cost of sales (5) (17) (5) (68)
Liquefaction Supply Derivatives gain (2) LNG revenues 21  — 
Liquefaction Supply Derivatives gain (loss) (2) Cost of sales (103) (139) 372  — 
(1)    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.
(2)    Does not include the realized value associated with derivative instruments that settle through physical delivery.

FX Derivatives

Cheniere Marketing has entered into FX Derivatives to protect against the volatility in future cash flows attributable to changes in international currency exchange rates. The FX Derivatives economically hedge the foreign currency exposure arising from cash flows expended for both physical and financial LNG transactions.

14


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
The following table shows the fair value and location of our FX Derivatives on our Consolidated Balance Sheets (in millions):
Fair Value Measurements as of
Consolidated Balance Sheets Location September 30, 2020 December 31, 2019
FX Derivatives Derivative assets $ $
FX Derivatives Derivative liabilities (5) (1)
FX Derivatives Non-current derivative liabilities (1) — 

The total notional amount of our FX Derivatives was $535 million and $827 million as of September 30, 2020 and December 31, 2019, respectively.
    
The following table shows the changes in the fair value, settlements and location of our FX Derivatives recorded on our Consolidated Statements of Operations during the three and nine months ended September 30, 2020 and 2019 (in millions):
Three Months Ended September 30, Nine Months Ended September 30,
Consolidated Statements of Operations Location 2020 2019 2020 2019
FX Derivatives gain (loss) LNG revenues $ (5) $ 43  $ 22  $ 52 

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):
Gross Amounts Recognized Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets
Offsetting Derivative Assets (Liabilities)
As of September 30, 2020
CCH Interest Rate Derivatives $ (165) $ —  $ (165)
Liquefaction Supply Derivatives 687  (7) 680 
Liquefaction Supply Derivatives (177) 18  (159)
LNG Trading Derivatives 111  (12) 99 
LNG Trading Derivatives (14) (7)
FX Derivatives 17  (9)
FX Derivatives (21) 15  (6)
As of December 31, 2019
CCH Interest Rate Derivatives $ (81) $ —  $ (81)
CCH Interest Rate Forward Start Derivatives (8) —  (8)
Liquefaction Supply Derivatives 281  (14) 267 
Liquefaction Supply Derivatives (126) (118)
LNG Trading Derivatives 229  (4) 225 
LNG Trading Derivatives (60) —  (60)
FX Derivatives (4)
FX Derivatives (6) (1)

15


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
NOTE 7—OTHER NON-CURRENT ASSETS

As of September 30, 2020 and December 31, 2019, other non-current assets, net consisted of the following (in millions):
September 30, December 31,
2020 2019
Advances made to municipalities for water system enhancements $ 85  $ 87 
Advances and other asset conveyances to third parties to support LNG terminals 61  55 
Advances made under EPC and non-EPC contracts 29 
Equity method investments 77  108 
Debt issuance costs and debt discount, net 46  45 
Tax-related payments and receivables 20  20 
Contract assets, net 64  18 
Other 27  26 
Total other non-current assets, net $ 385  $ 388 
Equity Method Investments

Our equity method investments consist of interests in privately-held companies. In 2017, we acquired an equity interest in Midship Holdings, LLC (“Midship Holdings”), which manages the business and affairs of Midship Pipeline Company, LLC (“Midship Pipeline”), which we account for as an equity method investment. See Note 8—Other Non-Current Assets of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the fiscal year ended December 31, 2019 for further information.

During the three and nine months ended September 30, 2020, we recognized other-than-temporary impairment losses of $129 million related to our investment in Midship Holdings. Impairment was precipitated primarily due to declining market conditions in the energy industry and customer credit risk, resulting in a reduction in the fair value of our equity interests. During the three and nine months ended September 30, 2019, we recognized losses of $87 million related to our investments in certain equity method investees, including Midship Holdings. Impairments were primarily the result of cost overruns and extended construction timelines for operating infrastructure of our investees’ projects, resulting in a reduction of the fair value of our equity interests. The fair values of our equity interests were measured using an income approach, which utilized level 3 fair value inputs such as projected earnings and discount rates, and/or market approach. Impairment losses associated with our equity method investments are presented in other expense, net.

Our investment in Midship Holdings, net of impairment losses, was $76 million and $105 million at September 30, 2020 and December 31, 2019, respectively.

NOTE 8—NON-CONTROLLING INTEREST AND VARIABLE INTEREST ENTITY

We own a 48.6% limited partner interest in Cheniere Partners in the form of 239.9 million common units, with the remaining non-controlling interest held by The Blackstone Group Inc., Brookfield Asset Management Inc. and the public. In July 2020, the board of directors of Cheniere Partners’ general partner confirmed and approved that, following the distribution with respect to the three months ended June 30, 2020, the financial tests required for conversion of Cheniere Partners’ subordinated units, all of which were held by us, were met under the terms of Cheniere Partners’ partnership agreement. Accordingly, effective August 17, 2020, the first business day following the payment of the distribution, all of Cheniere Partners’ subordinated units were automatically converted into common units on a one-for-one basis and the subordination period was terminated. We also own 100% of the general partner interest and the incentive distribution rights in Cheniere Partners. Cheniere Partners is accounted for as a consolidated VIE. See Note 9—Non-Controlling Interest and Variable Interest Entity of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the fiscal year ended December 31, 2019 for further information.
16


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)

The following table presents the summarized assets and liabilities (in millions) of Cheniere Partners, our consolidated VIE, which are included in our Consolidated Balance Sheets. The assets in the table below may only be used to settle obligations of Cheniere Partners. In addition, there is no recourse to us for the consolidated VIE’s liabilities. The assets and liabilities in the table below include third-party assets and liabilities of Cheniere Partners only and exclude intercompany balances that eliminate in consolidation.
September 30, December 31,
2020 2019
ASSETS  
Current assets    
Cash and cash equivalents $ 1,254  $ 1,781 
Restricted cash 157  181 
Accounts and other receivables, net 204  297 
Other current assets 244  184 
Total current assets 1,859  2,443 
Property, plant and equipment, net 16,666  16,368 
Other non-current assets, net 303  309 
Total assets $ 18,828  $ 19,120 
LIABILITIES    
Current liabilities    
Accrued liabilities $ 564  $ 709 
Other current liabilities 236  210 
Total current liabilities 800  919 
Long-term debt, net 17,573  17,579 
Other non-current liabilities 119  104 
Total liabilities $ 18,492  $ 18,602 

NOTE 9—ACCRUED LIABILITIES
  
As of September 30, 2020 and December 31, 2019, accrued liabilities consisted of the following (in millions): 
September 30, December 31,
2020 2019
Interest costs and related debt fees $ 375  $ 293 
Accrued natural gas purchases 350  460 
LNG terminals and related pipeline costs 106  327 
Compensation and benefits 88  115 
Accrued LNG inventory
Other accrued liabilities 84  80 
Total accrued liabilities $ 1,006  $ 1,281 
 
17


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
NOTE 10—DEBT
 
As of September 30, 2020 and December 31, 2019, our debt consisted of the following (in millions): 
September 30, December 31,
2020 2019
Long-term debt:
SPL — 4.200% to 6.25% senior secured notes due through 2037 and working capital facility (“2020 SPL Working Capital Facility”)
$ 13,650  $ 13,650 
Cheniere Partners 4.500% to 5.625% senior notes due through 2029 and credit facilities (“2019 CQP Credit Facilities”)
4,100  4,100 
CCH 3.52% to 7.000% senior secured notes due through 2039 and CCH Credit Facility
10,240  10,235 
CCH HoldCo II —11.0% Convertible Senior Secured Notes due 2025 (“2025 CCH HoldCo II Convertible Senior Notes”)
—  1,578 
Cheniere 4.625% Senior Secured Notes due 2028 (the “2028 Cheniere Senior Secured Notes”), convertible notes, revolving credit facility (“Cheniere Revolving Credit Facility”) and term loan facility (“Cheniere Term Loan Facility”)
3,620  1,903 
Unamortized premium, discount and debt issuance costs, net (661) (692)
Total long-term debt, net 30,949  30,774 
Current debt:
SPL — $1.2 billion Amended and Restated SPL Working Capital Facility (“2015 SPL Working Capital Facility”)
—  — 
CCH $1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”) and current portion of CCH Credit Facility
249  — 
Cheniere Marketing — trade finance facilities
—  — 
Cheniere — current portion of 4.875% Convertible Unsecured Notes due 2021 (“2021 Cheniere Convertible Unsecured Notes”)
93 — 
Unamortized premium, discount and debt issuance costs, net (4) — 
Total current debt 338  — 
Total debt, net $ 31,287  $ 30,774 

Issuances

The following table shows the issuances of debt during the nine months ended September 30, 2020:
Maturity Date Interest Rate Principal Amount Issued (in millions)
Three Months Ended June 30, 2020
SPL — 4.500% Senior Secured Notes due 2030 (the “2030 SPL Senior Notes”) (1)
May 15, 2030 4.500% $ 2,000 
Three Months Ended September 30, 2020
CCH — 3.52% Senior Secured Notes due 2039 (the “3.52% CCH Senior Secured Notes”) (2)
December 31, 2039 3.52% 769 
Cheniere — 2028 Cheniere Senior Secured Notes (3)
October 15, 2028 4.625% 2,000 
Nine Months Ended September 30, 2020 total $ 4,769 
(1)Proceeds of the 2030 SPL Senior Notes, along with available cash, were used to redeem all of SPL’s outstanding 5.625% Senior Secured Notes due 2021 (the “2021 SPL Senior Notes”), resulting in the recognition of debt extinguishment costs of $43 million for the nine months ended September 30, 2020 relating to the payment of early redemption fees and write off of unamortized debt premium and issuance costs.
(2)Proceeds of the 3.52% CCH Senior Secured Notes were used to repay a portion of the outstanding borrowings under the CCH Credit Facility, pay costs associated with certain interest rate derivative instruments that were settled and pay certain fees, costs and expenses incurred in connection with these transactions. The repayment of the CCH Credit Facility resulted in the recognition of debt extinguishment costs of $9 million for the three and nine months ended September 30, 2020 relating to the write off of unamortized debt discounts and issuance costs.
18


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
(3)Proceeds of the 2028 Cheniere Senior Secured Notes, along with $100 million in available cash, were used to prepay approximately $2.1 billion of the outstanding indebtedness of the Cheniere Term Loan Facility, resulting in the recognition of debt extinguishment costs of $14 million for the nine months ended September 30, 2020. The borrowings under the Cheniere Term Loan Facility, which was entered in June 2020 with available commitments of $2.62 billion and subsequently increased to $2.695 billion in July 2020, were used to (1) redeem the remaining outstanding principal amount of the 2025 CCH HoldCo II Convertible Senior Notes with cash at a price of $1,080 per $1,000 principal amount, (2) repurchase $844 million in aggregate principal amount of outstanding 2021 Cheniere Convertible Unsecured Notes at individually negotiated prices from a small number of investors and (3) pay the related fees and expenses. The redemption of the 2025 CCH HoldCo II Convertible Senior Notes and the repurchase of the 2021 Cheniere Convertible Unsecured Notes resulted in the recognition of debt extinguishment costs of $149 million and a reduction in equity associated with reacquisition of the embedded conversion option of $10 million.

Credit Facilities and Delayed Draw Term Loan

Below is a summary of our credit facilities and delayed draw term loan outstanding as of September 30, 2020 (in millions):
2020 SPL Working Capital Facility (1) 2019 CQP Credit Facilities CCH Credit Facility (2) CCH Working Capital Facility Cheniere Revolving Credit Facility Cheniere Term Loan Facility (3)
Original facility size $ 1,200  $ 1,500  $ 8,404  $ 350  $ 750  $ 2,620 
Incremental commitments —  —  1,566  850  500  75 
Less:
Outstanding balance —  —  2,627  141  375  248 
Commitments prepaid or terminated —  750  7,343  —  —  2,075 
Letters of credit issued 413  —  —  293  182  — 
Available commitment $ 787  $ 750  $ —  $ 766  $ 693  $ 372 
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%
LIBOR plus 1.75% or base rate plus 0.75%
LIBOR plus 1.25% - 1.75% or base rate plus 0.25% - 0.75%
LIBOR plus 1.75% - 2.50% or base rate plus 0.75% - 1.50%
(4)
Weighted average interest rate of outstanding balance n/a n/a 1.90% 1.41% 1.90% 2.15%
Maturity date March 19, 2025 May 29, 2024 June 30, 2024 June 29, 2023 December 13, 2022 June 18, 2023
(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.
(2)We prepaid $656 million of outstanding borrowings under the CCH Credit Facility during the three and nine months ended September 30, 2020 using proceeds from the issuance of the 3.52% CCH Senior Secured Notes.
(3)Borrowings under the Cheniere Term Loan Facility are subject to customary conditions precedent. The remaining commitments under the Cheniere Term Loan Facility are expected to be used to repay and/or repurchase a portion of the remaining principal amount of the 2021 Cheniere Convertible Unsecured Notes and for the payment of related fees and expenses. We pay a commitment fee equal to 30% of the margin for LIBOR loans multiplied by the average daily amount of undrawn commitments. If the Cheniere Term Loan Facility is still outstanding on the first anniversary of the Closing Date, as defined by the credit agreement, we will pay duration fees in an amount equal to 0.25% of the aggregate amount of commitments as of July 10, 2020, which was the date the loans were first borrowed under the Cheniere Term Loan Facility (the “Payment Date”). Furthermore, if the Cheniere Term Loan Facility is still outstanding on the second anniversary of the Closing Date, as defined by the credit agreement, we will pay 0.50% of the aggregate amount of commitments as of the Payment Date. Annual administrative fees must also be paid to the administrative agent for the Cheniere Term Loan Facility. Subject to customary exceptions, we are required to make mandatory prepayments with respect to the Cheniere Term Loan Facility using the net proceeds of certain events on a pro rata basis and on terms consistent with required prepayments under the Cheniere Revolving Credit Facility.
19


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
(4)LIBOR plus (1) 2.00% to 2.75% per annum in the first year, (2) 2.50% to 3.25% per annum in the second year and (3) 3.00% to 3.75% per annum in the third year until maturity, or base rate plus (1) 1.00% to 1.75% per annum in the first year, (2) 1.50% to 2.25% per annum in the second year and (3) 2.00% to 2.75% per annum in the third year until maturity.

Convertible Notes

Below is a summary of our convertible notes outstanding as of September 30, 2020 (in millions):
2021 Cheniere Convertible Unsecured Notes 2045 Cheniere Convertible Senior Notes
Aggregate original principal $ 1,000  $ 625 
Add: interest paid-in-kind 309  — 
Less: aggregate principal redeemed (844) — 
Aggregate remaining principal $ 465  $ 625 
Debt component, net of discount and debt issuance costs $ 453  $ 316 
Equity component $ 201  $ 194 
Interest payment method Paid-in-kind Cash
Conversion by us (1) —  (2)
Conversion by holders (1) (3) (4)
Conversion basis Cash and/or stock Cash and/or stock
Conversion value in excess of principal $ —  $ — 
Maturity date May 28, 2021 March 15, 2045
Contractual interest rate 4.875  % 4.25  %
Effective interest rate (5) 8.1  % 9.4  %
Remaining debt discount and debt issuance costs amortization period (6) 0.7 years 24.5 years
(1)Conversion is subject to various limitations and conditions.
(2)Redeemable at any time after March 15, 2020 at a redemption price payable in cash equal to the accreted amount of the $625 million aggregate principal amount of 4.25% Convertible Senior Notes due 2045 (the “2045 Cheniere Convertible Senior Notes”) to be redeemed, plus accrued and unpaid interest, if any, to such redemption date.
(3)Initially convertible at $93.64 (subject to adjustment upon the occurrence of certain specified events), provided that the closing price of our common stock is greater than or equal to the conversion price on the conversion date.
(4)Prior to December 15, 2044, convertible only under certain circumstances as specified in the indenture; thereafter, holders may convert their notes regardless of these circumstances. The conversion rate will initially equal 7.2265 shares of our common stock per $1,000 principal amount of the 2045 Cheniere Convertible Senior Notes, which corresponds to an initial conversion price of approximately $138.38 per share of our common stock (subject to adjustment upon the occurrence of certain specified events).
(5)Rate to accrete the discounted carrying value of the convertible notes to the face value over the remaining amortization period.
(6)We amortize any debt discount and debt issuance costs using the effective interest over the period through contractual maturity.

Restrictive Debt Covenants

As of September 30, 2020, each of our issuers was in compliance with all covenants related to their respective debt agreements.

20


CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(unaudited)
Interest Expense

Total interest expense, net of capitalized interest, including interest expense related to our convertible notes, consisted of the following (in millions):
  Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Interest cost on convertible notes:
Interest per contractual rate $ 20  $ 65  $ 140  $ 191 
Amortization of debt discount 10  41  29 
Amortization of debt issuance costs
Total interest cost related to convertible notes 28  78  189  229 
Interest cost on debt and finance leases excluding convertible notes 388  390  1,167  1,145