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Name | Symbol | Market | Type |
---|---|---|---|
Cheniere Energy Partners LP | AMEX:CQP | AMEX | Trust |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 51.88 | 0 | 01:00:00 |
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Delaware
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001-33366
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20-5913059
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(State or other jurisdiction of incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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700 Milam Street, Suite 1900
Houston, Texas
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77002
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Bcf
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billion cubic feet
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Bcf/d
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billion cubic feet per day
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Bcf/yr
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billion cubic feet per year
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Bcfe
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billion cubic feet equivalent
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DOE
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U.S. Department of Energy
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EPC
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engineering, procurement and construction
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FERC
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Federal Energy Regulatory Commission
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FTA countries
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countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
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GAAP
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generally accepted accounting principles in the United States
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Henry Hub
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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
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LIBOR
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London Interbank Offered Rate
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LNG
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liquefied natural gas, a product of natural gas consisting primarily of methane (CH
4
) that is in liquid form at near atmospheric pressure
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MMBtu
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million British thermal units, an energy unit
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mtpa
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million tonnes per annum
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non-FTA countries
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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
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SEC
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Securities and Exchange Commission
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SPA
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LNG sale and purchase agreement
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Train
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an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
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TUA
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terminal use agreement
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PART I.
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FINANCIAL INFORMATION
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ITEM 1.
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CONSOLIDATED FINANCIAL STATEMENTS
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June 30,
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December 31,
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||||
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2016
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2015
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||||
ASSETS
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(unaudited)
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||||
Current assets
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|
||||
Cash and cash equivalents
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|
$
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12,262
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$
|
146,221
|
|
Restricted cash
|
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450,506
|
|
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274,557
|
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||
Accounts and other receivables
|
|
71,499
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|
741
|
|
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Accounts receivable—affiliate
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176
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1,271
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Advances to affiliate
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41,486
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39,836
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Inventory
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48,331
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16,667
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Other current assets
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21,726
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14,182
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||
Total current assets
|
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645,986
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493,475
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||
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||||
Non-current restricted cash
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13,650
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13,650
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||
Property, plant and equipment, net
|
|
13,223,191
|
|
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11,931,602
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||
Debt issuance costs, net
|
|
137,605
|
|
|
132,091
|
|
||
Non-current derivative assets
|
|
20,472
|
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|
30,304
|
|
||
Other non-current assets
|
|
217,946
|
|
|
232,031
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|
||
Total assets
|
|
$
|
14,258,850
|
|
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$
|
12,833,153
|
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||||
LIABILITIES AND PARTNERS’ EQUITY
|
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|
||||
Current liabilities
|
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|
||||
Accounts payable
|
|
$
|
35,581
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|
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$
|
16,407
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Accrued liabilities
|
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336,316
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224,292
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Current debt, net
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1,662,257
|
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1,673,379
|
|
||
Due to affiliates
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|
87,349
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115,123
|
|
||
Deferred revenue
|
|
26,709
|
|
|
26,669
|
|
||
Deferred revenue—affiliate
|
|
717
|
|
|
717
|
|
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Derivative liabilities
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15,943
|
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6,430
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Other current liabilities
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54
|
|
|
—
|
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Total current liabilities
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2,164,926
|
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2,063,017
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||||
Long-term debt, net
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11,543,524
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10,018,325
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Non-current deferred revenue
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7,500
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9,500
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Non-current derivative liabilities
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26,904
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2,884
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Other non-current liabilities
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170
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175
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Other non-current liabilities—affiliate
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27,404
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26,321
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||||
Partners’ equity
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||||
Common unitholders’ interest (57.1 million units issued and outstanding at June 30, 2016 and December 31, 2015)
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204,009
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305,747
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Class B unitholders’ interest (145.3 million units issued and outstanding at June 30, 2016 and December 31, 2015)
|
|
(29,425
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)
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(37,429
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)
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Subordinated unitholders’ interest (135.4 million units issued and outstanding at June 30, 2016 and December 31, 2015)
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301,749
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428,035
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General partner’s interest (2% interest with 6.9 million units issued and outstanding at June 30, 2016 and December 31, 2015)
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12,089
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16,578
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Total partners’ equity
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488,422
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712,931
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Total liabilities and partners’ equity
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$
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14,258,850
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$
|
12,833,153
|
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Three Months Ended June 30,
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Six Months Ended June 30,
|
||||||||||||
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2016
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2015
|
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2016
|
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2015
|
||||||||
Revenues
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||||||||
Regasification revenues
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$
|
65,122
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$
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66,490
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$
|
130,506
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$
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133,208
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Regasification revenues—affiliate
|
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717
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1,199
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2,352
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2,011
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|
||||
LNG revenues
|
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85,332
|
|
|
—
|
|
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85,360
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|
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—
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|
||||
Total revenues
|
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151,171
|
|
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67,689
|
|
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218,218
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135,219
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||||
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|
||||||||
Operating costs and expenses
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|
|||||||
Cost of sales (excluding depreciation and amortization expense shown separately below)
|
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49,294
|
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91
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53,198
|
|
|
784
|
|
||||
Operating and maintenance expense
|
|
24,717
|
|
|
9,298
|
|
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42,102
|
|
|
39,838
|
|
||||
Operating and maintenance expense—affiliate
|
|
11,156
|
|
|
7,501
|
|
|
21,986
|
|
|
12,274
|
|
||||
Development expense
|
|
70
|
|
|
1,367
|
|
|
136
|
|
|
2,518
|
|
||||
Development expense—affiliate
|
|
153
|
|
|
206
|
|
|
282
|
|
|
410
|
|
||||
General and administrative expense
|
|
3,792
|
|
|
4,081
|
|
|
6,402
|
|
|
7,596
|
|
||||
General and administrative expense—affiliate
|
|
21,211
|
|
|
33,472
|
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|
43,409
|
|
|
55,069
|
|
||||
Depreciation and amortization expense
|
|
28,184
|
|
|
15,991
|
|
|
47,572
|
|
|
30,870
|
|
||||
Total operating costs and expenses
|
|
138,577
|
|
|
72,007
|
|
|
215,087
|
|
|
149,359
|
|
||||
|
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|
||||||||
Income (loss) from operations
|
|
12,594
|
|
|
(4,318
|
)
|
|
3,131
|
|
|
(14,140
|
)
|
||||
|
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|
||||||||
Other income (expense)
|
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|
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|
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|
|||||||
Interest expense, net of capitalized interest
|
|
(71,999
|
)
|
|
(50,148
|
)
|
|
(115,451
|
)
|
|
(92,993
|
)
|
||||
Loss on early extinguishment of debt
|
|
(26,304
|
)
|
|
(7,281
|
)
|
|
(27,761
|
)
|
|
(96,273
|
)
|
||||
Derivative gain (loss), net
|
|
(14,792
|
)
|
|
1,469
|
|
|
(35,600
|
)
|
|
(35,669
|
)
|
||||
Other income
|
|
376
|
|
|
235
|
|
|
650
|
|
|
356
|
|
||||
Total other expense
|
|
(112,719
|
)
|
|
(55,725
|
)
|
|
(178,162
|
)
|
|
(224,579
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
$
|
(100,125
|
)
|
|
$
|
(60,043
|
)
|
|
$
|
(175,031
|
)
|
|
$
|
(238,719
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per common unit
|
|
$
|
(0.21
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.62
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common units outstanding used for basic and diluted net loss per common unit calculation
|
|
57,084
|
|
|
57,080
|
|
|
57,084
|
|
|
57,080
|
|
|
Common Unitholders’ Interest
|
|
Class B Unitholders’ Interest
|
|
Subordinated Unitholder’s Interest
|
|
General Partner’s Interest
|
|
Total Partners’ Equity
|
||||||||||||||||||||||
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
|||||||||||||||
Balance at December 31, 2015
|
57,084
|
|
|
$
|
305,747
|
|
|
145,333
|
|
|
$
|
(37,429
|
)
|
|
135,384
|
|
|
$
|
428,035
|
|
|
6,894
|
|
|
$
|
16,578
|
|
|
$
|
712,931
|
|
Net loss
|
—
|
|
|
(50,875
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(120,656
|
)
|
|
—
|
|
|
(3,500
|
)
|
|
(175,031
|
)
|
|||||
Distributions
|
—
|
|
|
(48,521
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(990
|
)
|
|
(49,511
|
)
|
|||||
Issuance of common units as compensation to non-management directors
|
1
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
33
|
|
|||||
Amortization of beneficial conversion feature of Class B units
|
—
|
|
|
(2,374
|
)
|
|
—
|
|
|
8,004
|
|
|
—
|
|
|
(5,630
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance at June 30, 2016
|
57,085
|
|
|
$
|
204,009
|
|
|
145,333
|
|
|
$
|
(29,425
|
)
|
|
135,384
|
|
|
$
|
301,749
|
|
|
6,894
|
|
|
$
|
12,089
|
|
|
$
|
488,422
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(175,031
|
)
|
|
$
|
(238,719
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Non-cash LNG inventory write-downs
|
—
|
|
|
17,366
|
|
||
Depreciation and amortization expense
|
47,572
|
|
|
30,870
|
|
||
Amortization of debt issuance costs and discount
|
8,873
|
|
|
5,019
|
|
||
Loss on early extinguishment of debt
|
27,761
|
|
|
96,273
|
|
||
Total losses on derivatives, net
|
47,696
|
|
|
35,128
|
|
||
Net cash used for settlement of derivative instruments
|
(4,081
|
)
|
|
(38,028
|
)
|
||
Other
|
33
|
|
|
25
|
|
||
Changes in restricted cash for certain operating activities
|
110,089
|
|
|
15,954
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts and other receivables
|
(70,757
|
)
|
|
(77
|
)
|
||
Accounts receivable—affiliate
|
1,206
|
|
|
1,441
|
|
||
Advances to affiliate
|
956
|
|
|
2,541
|
|
||
Inventory
|
(17,470
|
)
|
|
(27,427
|
)
|
||
Accounts payable and accrued liabilities
|
49,320
|
|
|
84,580
|
|
||
Due to affiliates
|
(2,955
|
)
|
|
12,627
|
|
||
Deferred revenue
|
(1,960
|
)
|
|
(1,985
|
)
|
||
Other, net
|
(8,737
|
)
|
|
(9,509
|
)
|
||
Other, net—affiliate
|
(751
|
)
|
|
16,501
|
|
||
Net cash provided by operating activities
|
11,764
|
|
|
2,580
|
|
||
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
|
||
Property, plant and equipment, net
|
(1,223,969
|
)
|
|
(1,427,603
|
)
|
||
Use of restricted cash for the acquisition of property, plant and equipment
|
1,255,607
|
|
|
1,471,632
|
|
||
Other
|
(38,782
|
)
|
|
(51,017
|
)
|
||
Net cash used in investing activities
|
(7,144
|
)
|
|
(6,988
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
|
||
Proceeds from issuances of debt
|
3,365,000
|
|
|
2,000,000
|
|
||
Repayments of debt
|
(1,842,305
|
)
|
|
—
|
|
||
Debt issuance and deferred financing costs
|
(70,049
|
)
|
|
(145,998
|
)
|
||
Investment in restricted cash
|
(1,541,645
|
)
|
|
(1,854,002
|
)
|
||
Distributions to owners
|
(49,511
|
)
|
|
(49,508
|
)
|
||
Other
|
(69
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(138,579
|
)
|
|
(49,508
|
)
|
||
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
(133,959
|
)
|
|
(53,916
|
)
|
||
Cash and cash equivalents—beginning of period
|
146,221
|
|
|
248,830
|
|
||
Cash and cash equivalents—end of period
|
$
|
12,262
|
|
|
$
|
194,914
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||||
Current restricted cash
|
|
|
|
|
||||
SPLNG debt service and interest payment
|
|
$
|
77,415
|
|
|
$
|
77,415
|
|
Liquefaction Project
|
|
263,114
|
|
|
189,260
|
|
||
CTPL construction and interest payment
|
|
—
|
|
|
7,882
|
|
||
CQP and cash held by guarantor subsidiaries
|
|
109,977
|
|
|
—
|
|
||
Total current restricted cash
|
|
$
|
450,506
|
|
|
$
|
274,557
|
|
|
|
|
|
|
||||
Non-current restricted cash
|
|
|
|
|
||||
SPLNG debt service
|
|
$
|
13,650
|
|
|
$
|
13,650
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||||
SPL trade receivable
|
|
$
|
67,266
|
|
|
$
|
—
|
|
Interest receivable
|
|
116
|
|
|
23
|
|
||
Other accounts receivable
|
|
4,117
|
|
|
718
|
|
||
Total accounts and other receivables
|
|
$
|
71,499
|
|
|
$
|
741
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||||
Natural gas
|
|
$
|
5,338
|
|
|
$
|
5,724
|
|
LNG
|
|
17,535
|
|
|
3,690
|
|
||
Materials and other
|
|
25,458
|
|
|
7,253
|
|
||
Total inventory
|
|
$
|
48,331
|
|
|
$
|
16,667
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||||
LNG terminal costs
|
|
|
|
|
||||
LNG terminal
|
|
$
|
5,447,566
|
|
|
$
|
2,478,036
|
|
LNG terminal construction-in-process
|
|
8,224,575
|
|
|
9,859,836
|
|
||
LNG site and related costs, net
|
|
131
|
|
|
135
|
|
||
Accumulated depreciation
|
|
(454,967
|
)
|
|
(411,907
|
)
|
||
Total LNG terminal costs, net
|
|
13,217,305
|
|
|
11,926,100
|
|
||
Fixed assets
|
|
|
|
|
|
|
||
Computer and office equipment
|
|
1,451
|
|
|
1,126
|
|
||
Furniture and fixtures
|
|
1,667
|
|
|
1,375
|
|
||
Computer software
|
|
4,457
|
|
|
4,238
|
|
||
Machinery and equipment
|
|
1,938
|
|
|
1,906
|
|
||
Vehicles
|
|
2,748
|
|
|
2,081
|
|
||
Other
|
|
95
|
|
|
93
|
|
||
Accumulated depreciation
|
|
(6,470
|
)
|
|
(5,317
|
)
|
||
Total fixed assets, net
|
|
5,886
|
|
|
5,502
|
|
||
Property, plant and equipment, net
|
|
$
|
13,223,191
|
|
|
$
|
11,931,602
|
|
•
|
interest rate swaps to hedge the exposure to volatility in a portion of the floating-rate interest payments under certain of our credit facilities
(“Interest Rate Derivatives”)
;
|
•
|
commodity derivatives consisting of natural gas purchase agreements 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”)
; and
|
•
|
commodity derivatives to hedge the exposure to price risk attributable to future: (1) sales of our LNG inventory and (2) purchases of natural gas to operate the Sabine Pass LNG terminal
(“Natural Gas Derivatives”)
.
|
|
Fair Value Measurements as of
|
||||||||||||||||||||||||||||||
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||
|
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
|
||||||||||||||||
SPL Interest Rate Derivatives liability
|
$
|
—
|
|
|
$
|
(20,666
|
)
|
|
$
|
—
|
|
|
$
|
(20,666
|
)
|
|
$
|
—
|
|
|
$
|
(8,740
|
)
|
|
$
|
—
|
|
|
$
|
(8,740
|
)
|
CQP Interest Rate Derivatives liability
|
—
|
|
|
(19,148
|
)
|
|
—
|
|
|
(19,148
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Liquefaction Supply Derivatives asset (liability)
|
(2,850
|
)
|
|
381
|
|
|
22,434
|
|
|
19,965
|
|
|
—
|
|
|
(25
|
)
|
|
32,492
|
|
|
32,467
|
|
||||||||
Natural Gas Derivatives asset
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
|
|
Net Fair Value Asset
(in thousands)
|
|
Valuation Technique
|
|
Significant Unobservable Input
|
|
Significant Unobservable Inputs Range
|
Physical Liquefaction Supply Derivatives
|
|
$22,434
|
|
Income Approach
|
|
Basis Spread
|
|
$(0.35) - $(0.02)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Balance, beginning of period
|
|
$
|
30,054
|
|
|
$
|
342
|
|
|
$
|
32,492
|
|
|
$
|
342
|
|
Realized and mark-to-market losses:
|
|
|
|
|
|
|
|
|
||||||||
Included in cost of sales (1)
|
|
(7,855
|
)
|
|
27
|
|
|
(10,204
|
)
|
|
27
|
|
||||
Purchases and settlements:
|
|
|
|
|
|
|
|
|
||||||||
Purchases
|
|
(16
|
)
|
|
71
|
|
|
31
|
|
|
71
|
|
||||
Settlements (1)
|
|
(71
|
)
|
|
—
|
|
|
(128
|
)
|
|
—
|
|
||||
Transfers out of Level 3 (2)
|
|
322
|
|
|
—
|
|
|
243
|
|
|
—
|
|
||||
Balance, end of period
|
|
$
|
22,434
|
|
|
$
|
440
|
|
|
$
|
22,434
|
|
|
$
|
440
|
|
Change in unrealized gains relating to instruments still held at end of period
|
|
$
|
(7,795
|
)
|
|
$
|
27
|
|
|
$
|
(9,484
|
)
|
|
$
|
27
|
|
|
(1)
|
Does not include the decrease in fair value of
$0.1 million
and
$0.7 million
related to the realized gains capitalized during the
three and six months ended June 30, 2016
, respectively.
|
(2)
|
Transferred to Level 2 as a result of observable market for the underlying natural gas purchase agreements.
|
|
|
Initial Notional Amount
|
|
Maximum Notional Amount
|
|
Effective Date
|
|
Maturity Date
|
|
Weighted Average Fixed Interest Rate Paid
|
|
Variable Interest Rate Received
|
SPL Interest Rate Derivatives
|
|
$20.0 million
|
|
$628.8 million
|
|
August 14, 2012
|
|
July 31, 2019
|
|
1.98%
|
|
One-month LIBOR
|
CQP Interest Rate Derivatives
|
|
$225.0 million
|
|
$1.3 billion
|
|
March 22, 2016
|
|
February 29, 2020
|
|
1.19%
|
|
One-month LIBOR
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
|
SPL Interest Rate Derivatives
|
|
CQP Interest Rate Derivatives
|
|
Total
|
|
SPL Interest Rate Derivatives
|
|
CQP Interest Rate Derivatives
|
|
Total
|
||||||||||||
Balance Sheet Location
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities
|
|
$
|
(7,340
|
)
|
|
$
|
(5,570
|
)
|
|
$
|
(12,910
|
)
|
|
$
|
(5,940
|
)
|
|
$
|
—
|
|
|
$
|
(5,940
|
)
|
Non-current derivative liabilities
|
|
(13,326
|
)
|
|
(13,578
|
)
|
|
(26,904
|
)
|
|
(2,800
|
)
|
|
—
|
|
|
(2,800
|
)
|
||||||
Total derivative liabilities
|
|
$
|
(20,666
|
)
|
|
$
|
(19,148
|
)
|
|
$
|
(39,814
|
)
|
|
$
|
(8,740
|
)
|
|
$
|
—
|
|
|
$
|
(8,740
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
SPL Interest Rate Derivatives gain (loss)
|
|
$
|
(4,752
|
)
|
|
$
|
1,469
|
|
|
$
|
(16,030
|
)
|
|
$
|
(35,669
|
)
|
CQP Interest Rate Derivatives loss
|
|
(10,040
|
)
|
|
—
|
|
|
(19,570
|
)
|
|
—
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Liquefaction Supply Derivatives (1)
|
|
Natural Gas Derivatives
|
|
Total
|
|
Liquefaction Supply Derivatives
|
|
Natural Gas Derivatives (2)
|
|
Total
|
||||||||||||
Balance Sheet Location
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other current assets
|
$
|
2,526
|
|
|
$
|
—
|
|
|
$
|
2,526
|
|
|
$
|
2,737
|
|
|
$
|
39
|
|
|
$
|
2,776
|
|
Non-current derivative assets
|
20,472
|
|
|
—
|
|
|
20,472
|
|
|
30,304
|
|
|
—
|
|
|
30,304
|
|
||||||
Total derivative assets
|
22,998
|
|
|
—
|
|
|
22,998
|
|
|
33,041
|
|
|
39
|
|
|
33,080
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities
|
(3,033
|
)
|
|
—
|
|
|
(3,033
|
)
|
|
(490
|
)
|
|
—
|
|
|
(490
|
)
|
||||||
Non-current derivative liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|
—
|
|
|
(84
|
)
|
||||||
Total derivative liabilities
|
(3,033
|
)
|
|
—
|
|
|
(3,033
|
)
|
|
(574
|
)
|
|
—
|
|
|
(574
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative asset, net
|
$
|
19,965
|
|
|
$
|
—
|
|
|
$
|
19,965
|
|
|
$
|
32,467
|
|
|
$
|
39
|
|
|
$
|
32,506
|
|
|
(1)
|
Does not include collateral of
$0.5 million
deposited for such contracts, which is included in
other current assets
in our Consolidated Balance Sheet as of
June 30, 2016
.
|
(2)
|
Does not include collateral of
$0.4 million
deposited for such contracts, which is included in
other current assets
in our Consolidated Balance Sheet as of
December 31, 2015
.
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
Statement of Operations Location
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Liquefaction Supply Derivatives loss
|
LNG revenues
|
|
$
|
(34
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
Liquefaction Supply Derivatives gain (loss) (1)
|
Cost of sales
|
|
(8,670
|
)
|
|
81
|
|
|
(12,264
|
)
|
|
81
|
|
||||
Natural Gas Derivatives gain (loss)
|
Operating and maintenance expense
|
|
—
|
|
|
(294
|
)
|
|
174
|
|
|
460
|
|
|
(1)
|
Does not include the realized value associated with derivative instruments that settle through physical delivery.
|
|
|
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 June 30, 2016
|
|
|
|
|
|
|
||||||
SPL Interest Rate Derivatives
|
|
$
|
(20,666
|
)
|
|
$
|
—
|
|
|
$
|
(20,666
|
)
|
CQP Interest Rate Derivatives
|
|
(19,148
|
)
|
|
—
|
|
|
(19,148
|
)
|
|||
Liquefaction Supply Derivatives
|
|
23,165
|
|
|
(167
|
)
|
|
22,998
|
|
|||
Liquefaction Supply Derivatives
|
|
(4,505
|
)
|
|
1,472
|
|
|
(3,033
|
)
|
|||
As of December 31, 2015
|
|
|
|
|
|
|
||||||
SPL Interest Rate Derivatives
|
|
$
|
(8,740
|
)
|
|
$
|
—
|
|
|
$
|
(8,740
|
)
|
Liquefaction Supply Derivatives
|
|
33,636
|
|
|
(595
|
)
|
|
33,041
|
|
|||
Liquefaction Supply Derivatives
|
|
(574
|
)
|
|
—
|
|
|
(574
|
)
|
|||
Natural Gas Derivatives
|
|
188
|
|
|
(149
|
)
|
|
39
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||||
Advances made under EPC and non-EPC contracts
|
|
$
|
14,000
|
|
|
$
|
32,049
|
|
Advances made to municipalities for water system enhancements
|
|
95,584
|
|
|
89,953
|
|
||
Tax-related payments and receivables
|
|
25,751
|
|
|
27,615
|
|
||
Information technology service assets
|
|
29,532
|
|
|
30,371
|
|
||
Other
|
|
53,079
|
|
|
52,043
|
|
||
Total other non-current assets
|
|
$
|
217,946
|
|
|
$
|
232,031
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||||
Interest costs and related debt fees
|
|
$
|
155,222
|
|
|
$
|
150,336
|
|
Liquefaction Project costs
|
|
174,645
|
|
|
67,006
|
|
||
LNG terminal costs
|
|
4,795
|
|
|
3,918
|
|
||
Other accrued liabilities
|
|
1,654
|
|
|
3,032
|
|
||
Total accrued liabilities
|
|
$
|
336,316
|
|
|
$
|
224,292
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||||
Long-term debt:
|
|
|
|
|
||||
SPLNG
|
|
|
|
|
||||
6.50% Senior Secured Notes due 2020 (“2020 SPLNG Senior Notes”) (1)
|
|
$
|
420,000
|
|
|
$
|
420,000
|
|
SPL
|
|
|
|
|
||||
5.625% Senior Secured Notes due 2021 (“2021 SPL Senior Notes”), net of unamortized premium of $7,959 and $8,718
|
|
2,007,959
|
|
|
2,008,718
|
|
||
6.25% Senior Secured Notes due 2022 (“2022 SPL Senior Notes”)
|
|
1,000,000
|
|
|
1,000,000
|
|
||
5.625% Senior Secured Notes due 2023 (“2023 SPL Senior Notes”), net of unamortized premium of $6,029 and $6,392
|
|
1,506,029
|
|
|
1,506,392
|
|
||
5.75% Senior Secured Notes due 2024 (“2024 SPL Senior Notes”)
|
|
2,000,000
|
|
|
2,000,000
|
|
||
5.625% Senior Secured Notes due 2025 (“2025 SPL Senior Notes”)
|
|
2,000,000
|
|
|
2,000,000
|
|
||
5.875% Senior Secured Notes due 2026 (“2026 SPL Senior Notes”)
|
|
1,500,000
|
|
|
—
|
|
||
2015 SPL Credit Facilities
|
|
832,695
|
|
|
845,000
|
|
||
CTPL
|
|
|
|
|
||||
$400.0 million Term Loan Facility (“CTPL Term Loan”), net of unamortized discount of zero and $1,429
|
|
—
|
|
|
398,571
|
|
||
Cheniere Partners
|
|
|
|
|
||||
2016 CQP Credit Facilities
|
|
450,000
|
|
|
—
|
|
||
Unamortized debt issuance costs (2)
|
|
(173,159
|
)
|
|
(160,356
|
)
|
||
Total long-term debt, net
|
|
11,543,524
|
|
|
10,018,325
|
|
||
|
|
|
|
|
||||
Current debt:
|
|
|
|
|
||||
7.50% Senior Secured Notes due 2016 (“2016 SPLNG Senior Notes”), net of unamortized discount of $1,956 and $4,303 (3)
|
|
1,663,544
|
|
|
1,661,197
|
|
||
$1.2 billion SPL Working Capital Facility (“SPL Working Capital Facility”)
|
|
—
|
|
|
15,000
|
|
||
Unamortized debt issuance costs (2)
|
|
(1,287
|
)
|
|
(2,818
|
)
|
||
Total current debt, net
|
|
1,662,257
|
|
|
1,673,379
|
|
||
|
|
|
|
|
||||
Total debt, net
|
|
$
|
13,205,781
|
|
|
$
|
11,691,704
|
|
|
(1)
|
Must be redeemed or repaid concurrently with the
2016 SPLNG Senior Notes
under the terms of the
2016 CQP Credit Facilities
if the obligations under the
2016 SPLNG Senior Notes
are satisfied with borrowings under the
2016 CQP Credit Facilities
.
|
(2)
|
Effective January 1, 2016, we adopted ASU 2015-03 and ASU 2015-15, which require debt issuance costs related to term notes to be presented in the balance sheet as a direct deduction from the debt liability, rather than as an asset, retrospectively for each reporting period presented. As a result, we reclassified
$160.4 million
and
$2.8 million
from debt issuance costs, net to long-term debt, net and current debt, net, respectively, as of
December 31, 2015
.
|
(3)
|
Matures on November 30, 2016. We currently anticipate satisfying this obligation with borrowings under the
2016 CQP Credit Facilities
.
|
|
|
2015 SPL Credit Facilities
|
|
SPL Working Capital Facility
|
|
2016 CQP Credit Facilities
|
||||||
Original facility size
|
|
$
|
4,600,000
|
|
|
$
|
1,200,000
|
|
|
$
|
2,800,000
|
|
Outstanding balance
|
|
832,695
|
|
|
—
|
|
|
450,000
|
|
|||
Commitments terminated
|
|
1,287,305
|
|
|
—
|
|
|
—
|
|
|||
Letters of credit issued
|
|
—
|
|
|
237,270
|
|
|
7,500
|
|
|||
Available commitment
|
|
$
|
2,480,000
|
|
|
$
|
962,730
|
|
|
$
|
2,342,500
|
|
|
|
|
|
|
|
|
||||||
Interest rate
|
|
LIBOR plus 1.30% - 1.75% or base rate plus 1.75%
|
|
LIBOR plus 1.75% or base rate plus 0.75%
|
|
LIBOR plus 2.25% or base rate plus 1.25% (1)
|
||||||
Maturity date
|
|
Earlier of December 31, 2020 or second anniversary of SPL Trains 1 through 5 completion date
|
|
December 31, 2020, with various terms for underlying loans
|
|
February 25, 2020, with principals due quarterly commencing on February 19, 2019
|
|
(1)
|
There is a
0.50%
step-up for both LIBOR and base rate loans beginning on February 25, 2019.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Total interest cost
|
|
$
|
204,693
|
|
|
$
|
174,825
|
|
|
$
|
397,313
|
|
|
$
|
334,911
|
|
Capitalized interest
|
|
(132,694
|
)
|
|
(124,677
|
)
|
|
(281,862
|
)
|
|
(241,918
|
)
|
||||
Total interest expense, net
|
|
$
|
71,999
|
|
|
$
|
50,148
|
|
|
$
|
115,451
|
|
|
$
|
92,993
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
||||||||
Senior Notes, net of premium or discount (1)
|
|
$
|
12,097,532
|
|
|
$
|
12,163,254
|
|
|
$
|
10,596,307
|
|
|
$
|
9,525,809
|
|
CTPL Term Loan, net of discount (2)
|
|
—
|
|
|
—
|
|
|
398,571
|
|
|
400,000
|
|
||||
Credit facilities (2) (3)
|
|
1,282,695
|
|
|
1,282,695
|
|
|
860,000
|
|
|
860,000
|
|
|
(1)
|
Includes
2016 SPLNG Senior Notes
, net of discount;
2020 SPLNG Senior Notes
;
2021 SPL Senior Notes
, net of premium;
2022 SPL Senior Notes
;
2023 SPL Senior Notes
, net of premium;
2024 SPL Senior Notes
;
2025 SPL Senior Notes
and
2026 SPL Senior Notes
(collectively, the “Senior Notes”)
. The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of the
Senior Notes
and other similar instruments.
|
(2)
|
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.
|
(3)
|
Includes
2015 SPL Credit Facilities
,
SPL Working Capital Facility
and
2016 CQP Credit Facilities
.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Regasification revenues—affiliate
|
||||||||||||||||
Contracts for Sale and Purchase of Natural Gas and LNG
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
919
|
|
|
$
|
—
|
|
|
Tug Boat Lease Sharing Agreement
|
717
|
|
|
708
|
|
|
1,433
|
|
|
1,417
|
|
|||||
Other agreements
|
—
|
|
|
491
|
|
|
—
|
|
|
594
|
|
|||||
Total regasification revenues—affiliate
|
717
|
|
|
1,199
|
|
|
2,352
|
|
|
2,011
|
|
|||||
|
||||||||||||||||
Operating and maintenance expense—affiliate
|
||||||||||||||||
Contracts for Sale and Purchase of Natural Gas and LNG
|
—
|
|
|
—
|
|
|
607
|
|
|
—
|
|
|||||
Services Agreements
|
11,167
|
|
|
7,502
|
|
|
21,395
|
|
|
12,280
|
|
|||||
Other agreements
|
(11
|
)
|
|
(1
|
)
|
|
(16
|
)
|
|
(6
|
)
|
|||||
Total operating and maintenance expense—affiliate
|
11,156
|
|
|
7,501
|
|
|
21,986
|
|
|
12,274
|
|
|||||
|
||||||||||||||||
Development expense—affiliate
|
||||||||||||||||
Services Agreements
|
153
|
|
|
206
|
|
|
282
|
|
|
410
|
|
|||||
|
||||||||||||||||
General and administrative expense—affiliate
|
||||||||||||||||
Services Agreements
|
21,211
|
|
|
33,472
|
|
|
43,409
|
|
|
55,069
|
|
|
Common Units
|
|
Class B Units
|
|
Subordinated Units
|
||||||
2016
|
$
|
(29,566
|
)
|
|
$
|
99,685
|
|
|
$
|
(70,119
|
)
|
2017
|
(594,434
|
)
|
|
2,004,209
|
|
|
(1,409,775
|
)
|
|
|
|
|
Limited Partner Units
|
|
|
||||||||||||||
|
|
Total
|
|
Common Units
|
|
Class B Units
|
|
Subordinated Units
|
|
General Partner Units
|
||||||||||
Three Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
|
$
|
(100,125
|
)
|
|
|
|
|
|
|
|
|
||||||||
Declared distributions
|
|
24,755
|
|
|
24,260
|
|
|
—
|
|
|
—
|
|
|
495
|
|
|||||
Assumed allocation of undistributed net loss
|
|
$
|
(124,880
|
)
|
|
(36,298
|
)
|
|
—
|
|
|
(86,085
|
)
|
|
(2,497
|
)
|
||||
Assumed allocation of net loss
|
|
|
|
$
|
(12,038
|
)
|
|
$
|
—
|
|
|
$
|
(86,085
|
)
|
|
$
|
(2,002
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average units outstanding
|
|
|
|
57,084
|
|
|
145,333
|
|
|
135,384
|
|
|
|
|||||||
Net loss per unit
|
|
|
|
$
|
(0.21
|
)
|
|
$
|
—
|
|
|
$
|
(0.64
|
)
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
|
$
|
(60,043
|
)
|
|
|
|
|
|
|
|
|
||||||||
Declared distributions
|
|
24,754
|
|
|
24,259
|
|
|
—
|
|
|
—
|
|
|
495
|
|
|||||
Assumed allocation of undistributed net loss
|
|
$
|
(84,797
|
)
|
|
(24,646
|
)
|
|
—
|
|
|
(58,455
|
)
|
|
(1,696
|
)
|
||||
Assumed allocation of net loss
|
|
|
|
$
|
(387
|
)
|
|
$
|
—
|
|
|
$
|
(58,455
|
)
|
|
$
|
(1,201
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average units outstanding
|
|
|
|
57,080
|
|
|
145,333
|
|
|
135,384
|
|
|
|
|||||||
Net loss per unit
|
|
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
(0.43
|
)
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
|
$
|
(175,031
|
)
|
|
|
|
|
|
|
|
|
||||||||
Declared distributions
|
|
49,511
|
|
|
48,521
|
|
|
—
|
|
|
—
|
|
|
990
|
|
|||||
Assumed allocation of undistributed net loss
|
|
$
|
(224,542
|
)
|
|
(65,265
|
)
|
|
—
|
|
|
(154,787
|
)
|
|
(4,490
|
)
|
||||
Assumed allocation of net loss
|
|
|
|
$
|
(16,744
|
)
|
|
$
|
—
|
|
|
$
|
(154,787
|
)
|
|
$
|
(3,500
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average units outstanding
|
|
|
|
57,084
|
|
|
145,333
|
|
|
135,384
|
|
|
|
|||||||
Net loss per unit
|
|
|
|
$
|
(0.29
|
)
|
|
$
|
—
|
|
|
$
|
(1.14
|
)
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
|
$
|
(238,719
|
)
|
|
|
|
|
|
|
|
|
||||||||
Declared distributions
|
|
49,508
|
|
|
48,518
|
|
|
—
|
|
|
—
|
|
|
990
|
|
|||||
Assumed allocation of undistributed net loss
|
|
$
|
(288,227
|
)
|
|
(83,771
|
)
|
|
—
|
|
|
(198,691
|
)
|
|
(5,765
|
)
|
||||
Assumed allocation of net loss
|
|
|
|
$
|
(35,253
|
)
|
|
$
|
—
|
|
|
$
|
(198,691
|
)
|
|
$
|
(4,775
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average units outstanding
|
|
|
|
57,080
|
|
|
145,333
|
|
|
135,384
|
|
|
|
|||||||
Net loss per unit
|
|
|
|
$
|
(0.62
|
)
|
|
$
|
—
|
|
|
$
|
(1.47
|
)
|
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash paid during the period for interest, net of amounts capitalized
|
$
|
100,357
|
|
|
$
|
55,516
|
|
Standard
|
|
Description
|
|
Expected Date of Adoption
|
|
Effect on our Consolidated Financial Statements or Other Significant Matters
|
ASU 2014-09,
Revenue from Contracts with Customers (Topic 606)
, and subsequent amendments thereto
|
|
This standard amends existing revenue recognition guidance and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance may be early adopted beginning January 1, 2017, and may be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption.
|
|
January 1, 2018
|
|
We are currently evaluating the impact of the provisions of this guidance on our Consolidated Financial Statements and related disclosures.
|
ASU 2014-15,
Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern
|
|
This standard requires an entity’s management to evaluate, for each reporting period, whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued. Additional disclosures are required if management concludes that conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. Early adoption is permitted.
|
|
December 31, 2016
|
|
The adoption of this guidance is not expected to have an impact on our Consolidated Financial Statements or related disclosures.
|
ASU 2015-11,
Inventory (Topic 330): Simplifying the Measurement of Inventory
|
|
This standard requires inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance may be early adopted and must be adopted prospectively.
|
|
January 1, 2017
|
|
We are currently evaluating the impact of the provisions of this guidance on our Consolidated Financial Statements and related disclosures.
|
ASU 2016-02,
Leases (Topic 842)
|
|
This standard requires a lessee to recognize leases on its balance sheet by recording a liability representing the obligation to make future lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. A lessee is permitted to make an election not to recognize lease assets and liabilities for leases with a term of 12 months or less. The standard also modifies the definition of a lease and requires expanded disclosures. This guidance may be early adopted, and must be adopted using a modified retrospective approach with certain available practical expedients.
|
|
January 1, 2019
|
|
We are currently evaluating the impact of the provisions of this guidance on our Consolidated Financial Statements and related disclosures.
|
Standard
|
|
Description
|
|
Date of Adoption
|
|
Effect on our Consolidated Financial Statements or Other Significant Matters
|
ASU 2015-02,
Consolidation (Topic 810): Amendments to the Consolidation Analysis
|
|
These amendments primarily affect asset managers and reporting entities involved with limited partnerships or similar entities, but the analysis is relevant in the evaluation of any reporting organization’s requirement to consolidate a legal entity. This guidance changes (1) the identification of variable interests, (2) the variable interest entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. This guidance may be early adopted, and may be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption.
|
|
January 1, 2016
|
|
The adoption of this guidance did not have an impact on our Consolidated Financial Statements or related disclosures.
|
ASU 2015-03,
Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs
and ASU 2015-15,
Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
|
|
These standards require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. Debt issuance costs incurred in connection with line of credit arrangements may be presented as an asset and subsequently amortized ratably over the term of the line of credit arrangement. This guidance may be early adopted, and must be adopted retrospectively to each prior reporting period presented.
|
|
January 1, 2016
|
|
Upon adoption of these standards, the balance of debt, net was reduced by the balance of debt issuance costs, net, except for the balance related to line of credit arrangements, on our Consolidated Balance Sheets. See
Note 10—Debt
for additional disclosures.
|
ASU 2015-06,
Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions
|
|
This standard requires a master limited partnership to allocate net income (losses) of a transferred business entirely to the general partner when computing earnings per unit for periods before the dropdown transaction occurred. This guidance also requires a master limited partnership to disclose the effects of the dropdown transaction on net income (losses) per unit for the periods before and after the dropdown transaction occurred. This guidance may be early adopted, and must be adopted retrospectively to each prior reporting period presented.
|
|
January 1, 2016
|
|
The adoption of this guidance did not have an impact on our Consolidated Financial Statements or related disclosures.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
statements regarding our ability to pay distributions to our unitholders;
|
•
|
statements regarding our expected receipt of cash distributions from SPLNG, SPL or CTPL;
|
•
|
statements that we expect to commence or complete construction of our proposed LNG terminals, liquefaction facilities, pipeline facilities or other projects, or any expansions thereof, by certain dates, or at all;
|
•
|
statements regarding future levels of domestic and international natural gas production, supply or consumption or future levels of LNG imports into or exports from North America and other countries worldwide or purchases of natural gas, regardless of the source of such information, or the transportation or other infrastructure or demand for and prices related to natural gas, LNG or other hydrocarbon products;
|
•
|
statements regarding any financing transactions or arrangements, or ability to enter into such transactions;
|
•
|
statements relating to the construction of our Trains, including statements concerning the engagement of any EPC contractor or other contractor and the anticipated terms and provisions of any agreement with any EPC or other contractor, and anticipated costs related thereto;
|
•
|
statements regarding any SPA or any other agreement to be entered into or performed substantially in the future, including any revenues anticipated to be received and the anticipated timing thereof, and statements regarding the amounts of total LNG regasification, natural gas liquefaction or storage capacities that are, or may become, subject to contracts;
|
•
|
statements regarding counterparties to our commercial contracts, construction contracts and other contracts;
|
•
|
statements regarding our planned development and construction of additional Trains, including the financing of such Trains;
|
•
|
statements that our Trains, when completed, will have certain characteristics, including amounts of liquefaction capacities;
|
•
|
statements regarding our business strategy, our strengths, our business and operation plans or any other plans, forecasts, projections, or objectives, including anticipated revenues and capital expenditures, any or all of which are subject to change;
|
•
|
statements regarding legislative, governmental, regulatory, administrative or other public body actions, approvals, requirements, permits, applications, filings, investigations, proceedings or decisions; and
|
•
|
any other statements that relate to non-historica
l or future information.
|
•
|
Overview of Business
|
•
|
Overview of Significant Events
|
•
|
Liquidity and Capital Resources
|
•
|
Results of Operations
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Summary of Critical Accounting Estimates
|
•
|
Recent Accounting Standards
|
•
|
In February 2016, we entered into a Credit and Guaranty Agreement for the incurrence of debt of up to an aggregate amount of approximately $2.8 billion
(the “2016 CQP Credit Facilities”)
. The
2016 CQP Credit Facilities
consist of: (1) a
$450.0 million
CTPL tranche term loan that was used to prepay the
$400.0 million
term loan facility
(the “CTPL Term Loan”)
in February 2016, (2) an approximately
$2.1 billion
SPLNG tranche term loan that will be used to redeem or repay the approximately
$2.1 billion
of the 7.50% Senior Secured Notes due 2016 issued by SPLNG
(the “2016 SPLNG Senior Notes”)
and the 6.50% Senior Secured Notes due 2020 issued by SPLNG
(the “2020 SPLNG Senior Notes” and collectively with the 2016 SPLNG Senior Notes, the “SPLNG Senior Notes”)
(which must be redeemed or repaid concurrently under the terms of the
2016 CQP Credit Facilities
), (3) a
$125.0 million
debt service reserve credit facility
(the “DSR Facility”)
that may be used to satisfy a
six
-month debt service reserve requirement and (4) a
$115.0 million
revolving credit facility that may be used for general business purposes.
|
•
|
In February 2016, SPL commenced production and shipment of LNG commissioning cargoes from Train 1 of the
Liquefaction Project
.
|
•
|
In May 2016, the board of directors of Cheniere Energy Partners GP, LLC (“Cheniere GP”), our general partner, appointed Jack Fusco as the Chief Executive Officer of Cheniere GP, effective as of May 12, 2016.
|
•
|
In May 2016, Train 1 of the
Liquefaction Project
achieved substantial completion and initiated operating activities.
|
•
|
In June 2016, SPL issued an aggregate principal amount of $1.5 billion of 5.875% Senior Secured Notes due 2026
(the “2026 SPL Senior Notes”)
. Net proceeds of the offering of approximately $1.3 billion, after deducting commissions, fees and expenses and incremental interest required under the
2026 SPL Senior Notes
during construction, were used to prepay a portion of the outstanding borrowings under the credit facilities it entered into in June 2015
(the “2015 SPL Credit Facilities”)
.
|
•
|
$1.7 billion
of
2016 SPLNG Senior Notes
;
|
•
|
$0.4 billion
of
2020 SPLNG Senior Notes
;
|
•
|
$2.0 billion
of 5.625% Senior Secured Notes due 2021 issued by SPL
(the “2021 SPL Senior Notes”)
;
|
•
|
$1.0 billion
of 6.25% Senior Secured Notes due 2022 issued by SPL
(the “2022 SPL Senior Notes”)
;
|
•
|
$1.5 billion
of 5.625% Senior Secured Notes due 2023 issued by SPL
(the “2023 SPL Senior Notes”)
;
|
•
|
$2.0 billion
of 5.75% Senior Secured Notes due 2024 issued by SPL
(the “2024 SPL Senior Notes”)
;
|
•
|
$2.0 billion
of 5.625% Senior Secured Notes due 2025
(the “2025 SPL Senior Notes” and collectively with the 2021 SPL Senior Notes, the 2022 SPL Senior Notes, the 2023 SPL Senior Notes, the 2024 SPL Senior Notes and the 2026 SPL Senior Notes, the “SPL Senior Notes”)
; and
|
•
|
$1.5 billion
of
2026 SPL Senior Notes
.
|
•
|
1.0% of the principal amount of the
2016 SPLNG Senior Notes
; or
|
•
|
the excess of: (1) the present value at such redemption date of (a) the redemption price of the
2016 SPLNG Senior Notes
plus (b) all required interest payments due on the
2016 SPLNG Senior Notes
(excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the treasury rate as of such redemption date plus 50 basis points; over (2) the principal amount of the
2016 SPLNG Senior Notes
, if greater.
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Operating cash flows
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
11,764
|
|
|
$
|
2,580
|
|
Changes in restricted cash for certain operating activities
|
(110,089
|
)
|
|
(15,954
|
)
|
||
Cash, cash equivalents and restricted cash used in operating activities
|
(98,325
|
)
|
|
(13,374
|
)
|
||
|
|
|
|
||||
Investing cash flows
|
|
|
|
||||
Net cash used in investing activities
|
(7,144
|
)
|
|
(6,988
|
)
|
||
Use of restricted cash for the acquisition of property, plant and equipment
|
(1,255,607
|
)
|
|
(1,471,632
|
)
|
||
Cash, cash equivalents and restricted cash used in investing activities
|
(1,262,751
|
)
|
|
(1,478,620
|
)
|
||
|
|
|
|
||||
Financing cash flows
|
|
|
|
||||
Net cash used in financing activities
|
(138,579
|
)
|
|
(49,508
|
)
|
||
Investment in restricted cash
|
1,541,645
|
|
|
1,854,002
|
|
||
Cash, cash equivalents and restricted cash used in financing activities
|
1,403,066
|
|
|
1,804,494
|
|
||
|
|
|
|
||||
Net increase in cash, cash equivalents and restricted cash
|
41,990
|
|
|
312,500
|
|
||
Cash, cash equivalents and restricted cash—beginning of period
|
434,428
|
|
|
988,998
|
|
||
Cash, cash equivalents and restricted cash—end of period
|
$
|
476,418
|
|
|
$
|
1,301,498
|
|
•
|
$450.0 million of borrowings under the
2016 CQP Credit Facilities
, which was entered into in February 2016 to prepay the $400.0 million CTPL Term Loan;
|
•
|
$1.3 billion of borrowings under the
2015 SPL Credit Facilities
;
|
•
|
issuance of an aggregate principal amount of $1.5 billion of the
2026 SPL Senior Notes
in June 2016, which was used to prepay $1.3 billion of the outstanding borrowings under the
2015 SPL Credit Facilities
;
|
•
|
$140.0 million borrowings, net of $155.0 million repayment, made under the
SPL Working Capital Facility
;
|
•
|
$70.0 million
of debt issuance and deferred financing costs related to up-front fees paid upon the closing of these transactions; and
|
•
|
$49.5 million
of distributions to unitholders.
|
•
|
issuance of an aggregate principal amount of $2.0 billion of the
2025 SPL Senior Notes
in March 2015;
|
•
|
entering into the
2015 SPL Credit Facilities
aggregating $4.6 billion in June 2015, which terminated and replaced the 2013 SPL Credit Facilities;
|
•
|
$146.0 million
of debt issuance and deferred financing costs related to up-front fees paid upon the closing of these transactions; and
|
•
|
$49.5 million
of distributions to unitholders.
|
|
|
|
|
|
|
|
|
Total Distribution (in thousands)
|
||||||||||||||||||
Date Paid
|
|
Period Covered by Distribution
|
|
Distribution Per Common Unit
|
|
Distribution Per Subordinated Unit
|
|
Common Units
|
|
Class B Units
|
|
Subordinated Units
|
|
General Partner Units
|
||||||||||||
May 13, 2016
|
|
January 1 - March 31, 2016
|
|
$
|
0.425
|
|
|
$
|
—
|
|
|
$
|
24,261
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
495
|
|
February 12, 2016
|
|
October 1 - December 31, 2015
|
|
0.425
|
|
|
—
|
|
|
24,261
|
|
|
—
|
|
|
—
|
|
|
495
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
May 15, 2015
|
|
January 1 - March 31, 2015
|
|
$
|
0.425
|
|
|
$
|
—
|
|
|
$
|
24,259
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
495
|
|
February 13, 2015
|
|
October 1 - December 31, 2014
|
|
0.425
|
|
|
—
|
|
|
24,259
|
|
|
—
|
|
|
—
|
|
|
495
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Regasification revenues
|
$
|
65,122
|
|
|
$
|
66,490
|
|
|
$
|
(1,368
|
)
|
|
$
|
130,506
|
|
|
$
|
133,208
|
|
|
$
|
(2,702
|
)
|
Regasification revenues—affiliate
|
717
|
|
|
1,199
|
|
|
(482
|
)
|
|
2,352
|
|
|
2,011
|
|
|
341
|
|
||||||
LNG revenues
|
85,332
|
|
|
—
|
|
|
85,332
|
|
|
85,360
|
|
|
—
|
|
|
85,360
|
|
||||||
Total revenues
|
$
|
151,171
|
|
|
$
|
67,689
|
|
|
$
|
83,482
|
|
|
$
|
218,218
|
|
|
$
|
135,219
|
|
|
$
|
82,999
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Cost of sales
|
$
|
49,294
|
|
|
$
|
91
|
|
|
$
|
49,203
|
|
|
$
|
53,198
|
|
|
$
|
784
|
|
|
$
|
52,414
|
|
Operating and maintenance expense
|
24,717
|
|
|
9,298
|
|
|
15,419
|
|
|
42,102
|
|
|
39,838
|
|
|
2,264
|
|
||||||
Operating and maintenance expense—affiliate
|
11,156
|
|
|
7,501
|
|
|
3,655
|
|
|
21,986
|
|
|
12,274
|
|
|
9,712
|
|
||||||
Development expense
|
70
|
|
|
1,367
|
|
|
(1,297
|
)
|
|
136
|
|
|
2,518
|
|
|
(2,382
|
)
|
||||||
Development expense—affiliate
|
153
|
|
|
206
|
|
|
(53
|
)
|
|
282
|
|
|
410
|
|
|
(128
|
)
|
||||||
General and administrative expense
|
3,792
|
|
|
4,081
|
|
|
(289
|
)
|
|
6,402
|
|
|
7,596
|
|
|
(1,194
|
)
|
||||||
General and administrative expense—affiliate
|
21,211
|
|
|
33,472
|
|
|
(12,261
|
)
|
|
43,409
|
|
|
55,069
|
|
|
(11,660
|
)
|
||||||
Depreciation and amortization expense
|
28,184
|
|
|
15,991
|
|
|
12,193
|
|
|
47,572
|
|
|
30,870
|
|
|
16,702
|
|
||||||
Total operating costs and expenses
|
$
|
138,577
|
|
|
$
|
72,007
|
|
|
$
|
66,570
|
|
|
$
|
215,087
|
|
|
$
|
149,359
|
|
|
$
|
65,728
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Interest expense, net of capitalized interest
|
$
|
71,999
|
|
|
$
|
50,148
|
|
|
$
|
21,851
|
|
|
$
|
115,451
|
|
|
$
|
92,993
|
|
|
$
|
22,458
|
|
Loss on early extinguishment of debt
|
26,304
|
|
|
7,281
|
|
|
19,023
|
|
|
27,761
|
|
|
96,273
|
|
|
(68,512
|
)
|
||||||
Derivative loss (gain), net
|
14,792
|
|
|
(1,469
|
)
|
|
16,261
|
|
|
35,600
|
|
|
35,669
|
|
|
(69
|
)
|
||||||
Other income
|
(376
|
)
|
|
(235
|
)
|
|
(141
|
)
|
|
(650
|
)
|
|
(356
|
)
|
|
(294
|
)
|
||||||
Total other expense
|
$
|
112,719
|
|
|
$
|
55,725
|
|
|
$
|
56,994
|
|
|
$
|
178,162
|
|
|
$
|
224,579
|
|
|
$
|
(46,417
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit No.
|
|
Description
|
4.1
|
|
Seventh Supplemental Indenture, dated as of June 14, 2016, between Sabine Pass Liquefaction, LLC and The Bank of New York Mellon, as Trustee under the Indenture (Incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K (SEC File No. 001-33366), filed on June 14, 2016)
|
10.1
|
|
Registration Rights Agreement, dated as of June 14, 2016, between Sabine Pass Liquefaction, LLC and Credit Suisse Securities (USA) LLC (Incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (SEC File No. 001-33366), filed on June 14, 2016)
|
10.2
|
|
Change orders to the Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Sabine Pass LNG Liquefaction Facility, dated as of November 11, 2011, between Sabine Pass Liquefaction, LLC and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-00045 April Site Closure for Cheniere Celebration, dated April 4, 2016, (ii) the Change Order CO-00046 Defer Completion of Ship Loading Time Commissioning Test, dated May 17, 2016, and (iii) the Change Order CO-00047 Re-Orientation of PSV Bypass Valves, dated May 25, 2016 (Incorporated by reference to Exhibit 10.2 to SPL’s Quarterly Report on Form 10-Q (SEC File No. 333-192373), filed on August 8, 2016)
|
10.3
|
|
Change orders to the Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Sabine Pass LNG Stage 2 Liquefaction Facility, dated as of December 20, 2012, between Sabine Pass Liquefaction, LLC and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-00021 Smokeless Flare Modification Study, dated March 29, 2016, (ii) the Change Order CO-00022 Cable Tray Support and Arc Flash Study, dated May 4, 2016, and (iii) the Change Order CO-00023 Re-Orientation of PSV Bypass Valves, dated May 17, 2016 (Incorporated by reference to Exhibit 10.3 to SPL’s Quarterly Report on Form 10-Q (SEC File No. 333-192373), filed on August 8, 2016)
|
10.4
|
|
Change orders to the Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Sabine Pass LNG Stage 3 Liquefaction Facility, dated as of May 4, 2015, between Sabine Pass Liquefaction, LLC and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-00005 Performance and Attendance Bonus (PAB) Incentive Program Provisional Sum, dated March 16, 2016, (ii) the Change Order CO-00006 Additional Bechtel Hours to Support RECON, Temporary Access Rd., Addition of Flash Liquid Expander, Removal of Vibration Monitor System, To-Date Reconciliation of Soils Preparation Provisional Sum, dated March 22, 2016, (iii) the Change Order CO-00007 Additional Support for FERC Document Requests, dated May 10, 2016, (iv) the Change Order CO-00008 Water System Scope Changes and Seal Design & Seal Gas Modification, dated May 4, 2016, (v) the Change Order CO-00009 Re-Orientation of PSV Bypass Valves, dated May 17, 2016, and (vi) the Change Order CO-00010 Deletion of Chlorine Analyzer, dated June 15, 2016 (Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.) (Incorporated by reference to Exhibit 10.4 to SPL’s Quarterly Report on Form 10-Q (SEC File No. 333-192373), filed on August 8, 2016)
|
31.1*
|
|
Certification by Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
|
31.2*
|
|
Certification by Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
|
32.1**
|
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2**
|
|
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
|
|
CHENIERE ENERGY PARTNERS, L.P.
|
|
|
|
By:
|
Cheniere Energy Partners GP, LLC,
|
|
|
|
its general partner
|
|
|
|
|
Date:
|
August 8, 2016
|
By:
|
/s/ Michael J. Wortley
|
|
|
|
Michael J. Wortley
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(on behalf of the registrant and
as principal financial officer)
|
|
|
|
|
Date:
|
August 8, 2016
|
By:
|
/s/ Leonard Travis
|
|
|
|
Leonard Travis
|
|
|
|
Chief Accounting Officer
|
|
|
|
(on behalf of the registrant and
as principal accounting officer)
|
1 Year Cheniere Energy Partners Chart |
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