SEC Info - Sabine Pass Liquefaction, LLC

2021

2020

ASSETS

(unaudited)

Current assets

Restricted cash

i 123

i 97

Accounts and other receivables, net

i 370

i 309

Accounts receivable—affiliate

i 99

i 185

Advances to affiliate

i 109

i 122

Inventory

i 89

i 93

Derivative assets

i 16

i 14

Other current assets

i 37

i 41

Other current assets—affiliate

i 21

Total current assets

i 864

i 882

Property, plant and equipment, net

i 14,282

i 14,255

Debt issuance costs, net

i 9

i 10

Non-current derivative assets

i 9

i 11

Other non-current assets, net

i 182

i 165

Total assets

i 15,346

i 15,323

LIABILITIES AND MEMBER’S EQUITY

Current liabilities

Accounts payable

i 7

i 8

Accrued liabilities

i 614

i 591

Accrued liabilities—related party

i 3

i 4

Current debt

i 850

i —

Due to affiliates

i 35

i 59

Deferred revenue

i 79

i 114

Deferred revenue—affiliate

i 5

i —

Derivative liabilities

i 26

i 11

Total current liabilities

i 1,619

i 787

Long-term debt, net

i 12,676

i 13,520

Non-current derivative liabilities

i 42

i 35

Other non-current liabilities

i 8

Other non-current liabilities—affiliate

i 16

i 15

Member’s equity

i 985

i 958

Total liabilities and member’s equity

i 15,346

i 15,323

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

SABINE PASS LIQUEFACTION, LLC

STATEMENTS OF MEMBER’S EQUITY

(in millions)

(unaudited)

Three Months Ended March 31, 2021

Sabine Pass LNG-LP, LLC

Total Member’s Equity

Balance at December 31, 2020

i 958

Distributions

( i 310)

Net income

i 337

Balance at March 31, 2021

i 985

Three Months Ended March 31, 2020

Sabine Pass LNG-LP, LLC

Total Member’s Equity

Balance at December 31, 2019

i 534

Capital contributions

i 226

Distributions

( i 376)

Net income

i 360

Balance at March 31, 2020

i 744

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

SABINE PASS LIQUEFACTION, LLC

STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

Three Months Ended March 31,

2021

2020

Cash flows from operating activities

Net income

i 337

i 360

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

i 117

Amortization of debt issuance costs, premium and discount

i 6

i 7

Loss on modification of debt

i —

i 1

Total losses (gains) on derivatives, net

i 2

( i 21)

Net cash provided by settlement of derivative instruments

i 20

i 5

Changes in operating assets and liabilities:

Accounts and other receivables, net

( i 60)

i 36

Accounts receivable—affiliate

i 86

i 66

Advances to affiliate

i 15

i 16

Inventory

i 4

i 18

Accounts payable and accrued liabilities

i 5

( i 160)

Accrued liabilities—related party

( i 1)

i —

Due to affiliates

( i 22)

( i 12)

Deferred revenue

( i 35)

( i 60)

Deferred revenue—affiliate

i 5

i —

Other, net

( i 4)

i 2

Other, net—affiliate

i —

( i 1)

Net cash provided by operating activities

i 475

i 374

Cash flows from investing activities

Property, plant and equipment, net

( i 138)

( i 293)

Net cash used in investing activities

( i 138)

( i 293)

Cash flows from financing activities

Debt issuance and other financing costs

( i 1)

( i 7)

Capital contributions

i —

i 225

Distributions

( i 310)

( i 371)

Net cash used in financing activities

( i 311)

( i 153)

Net increase (decrease) in restricted cash

i 26

( i 72)

Restricted cash—beginning of period

i 97

i 181

Restricted cash—end of period

i 123

i 109

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

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS

(unaudited)

NOTE 1— i NATURE OF OPERATIONS AND BASIS OF PRESENTATION

We are currently operating i five natural gas liquefaction Trains and are constructing i one additional Train that is expected to be substantially completed in the first half of 2022, for a total production capacity of approximately i 30 mtpa of LNG (the “Liquefaction Project”) at the Sabine Pass LNG terminal. The Sabine Pass LNG terminal is located in Cameron Parish, Louisiana, on the Sabine-Neches Waterway less than four miles from the Gulf Coast, adjacent to the existing regasification facilities owned and operated by SPLNG.

Basis of Presentation

The accompanying unaudited Financial Statements of SPL 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 Financial Statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended December 31, 2020. Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on our financial position, results of operations or cash flows.

i We are a disregarded entity for federal and state income tax purposes. Our taxable income or loss is included in the federal income tax return of Cheniere Partners, a publicly traded partnership which indirectly owns us. Cheniere Partners is not subject to federal or state income taxes, as its partners are taxed individually on their allocable share of Cheniere Partners taxable income. Accordingly, i no provision or liability for federal or state income taxes is included in the accompanying Financial Statements. /

Results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2021.

Recent Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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— i 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 Balance Sheets. As of March 31, 2021 and December 31, 2020, we had $ i 123 million and $ i 97 million of restricted cash, respectively.

Pursuant to the accounts agreement entered into with the collateral trustee for the benefit of our debt holders, we are required to deposit all cash received into reserve accounts controlled by the collateral trustee. The usage or withdrawal of such cash is restricted to the payment of liabilities related to the Liquefaction Project and other restricted payments.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 3— i ACCOUNTS AND OTHER RECEIVABLES

As of March 31, 2021 and December 31, 2020, accounts and other receivables, net consisted of the following (in millions):

March 31,

2021

2020

Trade receivable

i 349

i 300

Other accounts receivable

i 21

i 9

Total accounts and other receivables, net

i 370

i 309

NOTE 4— i INVENTORY

As of March 31, 2021 and December 31, 2020, inventory consisted of the following (in millions):

March 31,

2021

2020

Materials

i 68

LNG

i 11

i 8

Natural gas

i 9

i 17

Other

i 1

i —

Total inventory

i 89

i 93

NOTE 5— i PROPERTY, PLANT AND EQUIPMENT

As of March 31, 2021 and December 31, 2020, property, plant and equipment, net consisted of the following (in millions):

March 31,

2021

2020

LNG terminal costs

LNG terminal

i 13,712

i 13,711

LNG terminal construction-in-process

i 2,241

i 2,100

Accumulated depreciation

( i 1,676)

( i 1,561)

Total LNG terminal costs, net

i 14,277

i 14,250

Fixed assets

i 19

Accumulated depreciation

( i 14)

Total fixed assets, net

i 5

Property, plant and equipment, net

i 14,282

i 14,255

The following table shows depreciation expense during the three months ended March 31, 2021 and 2020 (in millions):


	Three Months Ended March 31,
		2021		2020
Depreciation expense		$	i 116	$	i 116

NOTE 6— i DERIVATIVE INSTRUMENTS

We have entered into commodity derivatives consisting of natural gas supply contracts 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”).

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 Statements of Income to the extent not utilized for the commissioning process.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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 March 31, 2021 and December 31, 2020, which are classified as derivative assets, non-current derivative assets, derivative liabilities or non-current derivative liabilities in our Balance Sheets (in millions):

Fair Value Measurements as of

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

Liquefaction Supply Derivatives asset (liability)

( i 4)

( i 3)

( i 36)

( i 43)

i 1

( i 1)

( i 21)

We value our Liquefaction Supply Derivatives using a market-based approach incorporating present value techniques, as needed, using observable commodity price curves, when available, 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 March 31, 2021 and December 31, 2020, some of our Physical Liquefaction Supply Derivatives existed within markets for which the pipeline infrastructure was under development to accommodate marketable physical gas flow.

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 prices. i The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of March 31, 2021:

Net Fair Value Liability
(in millions)

Valuation Approach

Significant Unobservable Input

Range of Significant Unobservable Inputs / Weighted Average (1)

Physical Liquefaction Supply Derivatives

$( i 36)

Market approach incorporating present value techniques

Henry Hub basis spread

$( i 0.350) - $ i 0.168 / $( i 0.001)

(1) Unobservable inputs were weighted by the relative fair value of the instruments.

Increases or decreases in basis, in isolation, would decrease or increase, respectively, the fair value of our Physical Liquefaction Supply Derivatives.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The following table shows the changes in the fair value of our Level 3 Physical Liquefaction Supply Derivatives during the three months ended March 31, 2021 and 2020 (in millions):

Three Months Ended March 31,

2021

2020

Balance, beginning of period

( i 21)

i 24

Realized and mark-to-market gains (losses):

Included in cost of sales

( i 12)

i 25

Purchases and settlements:

Purchases

i 1

Settlements

( i 4)

( i 3)

Transfers into Level 3, net (1)

i —

i 2

Balance, end of period

( i 36)

i 49

Change in unrealized gains (losses) relating to instruments still held at end of period

( i 12)

i 25

(1) Transferred into Level 3 as a result of unobservable market, or out of Level 3 as a result of observable market for the underlying natural gas purchase agreements.

All counterparty derivative contracts provide for the unconditional right of set-off in the event of default. We have elected to report derivative assets and liabilities arising from our derivative contracts with the same counterparty on a net basis. 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.

Liquefaction Supply Derivatives

We have entered into primarily index-based physical natural gas supply contracts and associated economic hedges to purchase natural gas for the commissioning and operation of the Liquefaction Project. The remaining terms of the physical natural gas supply contracts range up to i 10 years, some of which commence upon the satisfaction of certain events or states of affairs. The terms of the Financial Liquefaction Supply Derivatives range up to approximately i three years.

The notional natural gas position of our Liquefaction Supply Derivatives was approximately i 5,023 TBtu and i 4,970 TBtu as of March 31, 2021 and December 31, 2020, respectively, of which i i 91 / TBtu for each of the periods were for a natural gas supply contract that we have with a related party.

i The following table shows the fair value and location of our Liquefaction Supply Derivatives on our Balance Sheets (in millions):

Fair Value Measurements as of (1)

Balance Sheets Location

Derivative assets

i 16

i 14

Non-current derivative assets

i 9

i 11

Total derivative assets

i 25

Derivative liabilities

( i 26)

( i 11)

Non-current derivative liabilities

( i 42)

( i 35)

Total derivative liabilities

( i 68)

( i 46)

Derivative liability, net

( i 43)

( i 21)

(1) Does not include collateral posted with counterparties by us of $ i 11 million and $ i 4 million, which are included in other current assets in our Balance Sheets as of March 31, 2021 and December 31, 2020, respectively. Includes a natural gas supply contract that we have with a related party, which had a fair value of i i zero / as of both March 31, 2021 and December 31, 2020.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The following table shows the gain (loss) from changes in the fair value, settlements and location of our Liquefaction Supply Derivatives recorded on our Statements of Income during the three months ended March 31, 2021 and 2020 (in millions):


	Statements of Income Location (1)	Three Months Ended March 31,
			2021		2020

Liquefaction Supply Derivatives	Cost of sales		$	( i 2)	$	i 21

(1) Does not include the realized value associated with derivative instruments that settle through physical delivery. 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.

Balance Sheets Presentation

Our derivative instruments are presented on a net basis on our Balance Sheets as described above. i The following table shows the fair value of our derivatives outstanding on a gross and net basis (in millions):


	Liquefaction Supply Derivatives
As of March 31, 2021
Gross assets	$	i 68
Offsetting amounts	( i 43)
Net assets	$	i 25

Gross liabilities	$	( i 76)
Offsetting amounts	i 8
Net liabilities	$	( i 68)

As of December 31, 2020
Gross assets	$	i 69
Offsetting amounts	( i 44)
Net assets	$	i 25

Gross liabilities	$	( i 48)
Offsetting amounts	i 2
Net liabilities	$	( i 46)

NOTE 7— i OTHER NON-CURRENT ASSETS

As of March 31, 2021 and December 31, 2020, other non-current assets, net consisted of the following (in millions):

March 31,

2021

2020

Advances made to municipalities for water system enhancements

i 83

i 84

Advances and other asset conveyances to third parties to support LNG terminal

i 33

Operating lease assets

i 23

Advances made under EPC and non-EPC contracts

i 22

i 9

Information technology service prepayments

i 5

Other

i 16

i 11

Total other non-current assets, net

i 182

i 165

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 8— i ACCRUED LIABILITIES

As of March 31, 2021 and December 31, 2020, accrued liabilities consisted of the following (in millions):

March 31,

2021

2020

Interest costs and related debt fees

i 158

i 150

Accrued natural gas purchases

i 382

i 374

Liquefaction Project costs

i 71

i 64

Other accrued liabilities

i 3

Total accrued liabilities

i 614

i 591

NOTE 9— i DEBT

As of March 31, 2021 and December 31, 2020, our debt consisted of the following (in millions):

March 31,

2021

2020

Long-term debt:

i 4.200% to i 6.25% senior secured notes due between March 2022 and September 2037 and working capital facility (“2020 Working Capital Facility”)

i 12,797

i 13,650

Unamortized premium, discount and debt issuance costs, net

( i 121)

( i 130)

Total long-term debt, net

i 12,676

i 13,520

Current debt:

Current portion of i 6.25% senior secured notes due March 2022 (“2022 Senior Notes”) (1)

i 853

i —

Unamortized discount, premium and debt issuance costs, net

( i 3)

i —

Total current debt

i 850

i —

Total debt, net

i 13,526

i 13,520

(1)$ i 147 million of the 2022 Senior Notes is categorized as long-term debt because the proceeds from the expected sale of approximately $ i 147 million aggregate principal amount of i 2.95% Senior Secured Notes due 2037, expected to be issued in the second half of 2021 pursuant to a note purchase agreement we entered into in February 2021, are expected to be used to refinance a portion of 2022 Senior Notes.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

2020 Working Capital Facility

Below is a summary of our 2020 Working Capital Facility as of March 31, 2021 (in millions):

2020 Working Capital Facility (1)

Original facility size

i 1,200

Less:

Outstanding balance

i —

Letters of credit issued

i 413

Available commitment

i 787

Priority ranking

Senior secured

Interest rate on available balance

LIBOR plus i 1.125% - i 1.750% or base rate plus i 0.125% - i 0.750%

Weighted average interest rate of outstanding balance

n/a

Maturity date

i March 19, 2025

(1)The 2020 Working Capital Facility contains customary conditions precedent for extensions of credit, as well as customary affirmative and negative covenants. We pay a commitment fee equal to an annual rate of i 0.1% to i 0.3% (depending on our then-current rating), 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.

Restrictive Debt Covenants

The indentures governing our senior notes and other agreements underlying our debt contain customary terms and events of default and certain covenants that, among other things, may limit our ability to make certain investments or pay dividends or distributions.

As of March 31, 2021, we were in compliance with all covenants related to our debt agreements.

Interest Expense

Total interest expense, net of capitalized interest consisted of the following (in millions):

Three Months Ended March 31,

2021

2020

Total interest cost

i 190

i 198

Capitalized interest

( i 30)

( i 20)

Total interest expense, net of capitalized interest

i 160

i 178

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our debt (in millions):

Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value

Senior notes — Level 2 (1)

i 12,850

i 14,426

i 12,850

i 14,834

Senior notes — Level 3 (2)

i 800

i 953

i 800

i 1,036

Working capital facility (3)

i —

(1)The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of these senior notes and other similar instruments.

(2)The Level 3 estimated fair value was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including interest rates based on debt issued by parties with comparable credit ratings to us and inputs that are not observable in the market.

(3)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.

NOTE 10— i REVENUES FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue earned from contracts with customers during the three months ended March 31, 2021 and 2020 (in millions):

Three Months Ended March 31,

2021

2020

LNG revenues (1)

i 1,669

i 1,449

LNG revenues—affiliate

i 214

i 188

Total revenues

i 1,883

i 1,637

(1)LNG revenues include revenues for LNG cargoes in which our customers exercised their contractual right to not take delivery but remained obligated to pay fixed fees irrespective of such election. During the three months ended March 31, 2020, we recognized $ i 16 million in LNG revenues associated with LNG cargoes for which customers notified us that they would not take delivery, which would have been recognized subsequent to March 31, 2020 had the cargoes been lifted pursuant to the delivery schedules with the customers. We did i not have such revenues during the three months ended March 31, 2021. Revenue is generally recognized upon receipt of irrevocable notice that a customer will not take delivery because our customers have no contractual right to take delivery of such LNG cargo in future periods and our performance obligations with respect to such LNG cargo have been satisfied.

Contract Assets

The following table shows our contract assets, net, which are classified as other current assets and other non-current assets, net on our Balance Sheets (in millions):



	March 31,		December 31,
	2021		2020
Contract assets, net	$	i 1	$	i —

Contract assets represent our right to consideration for transferring goods or services to the customer under the terms of a sales contract when the associated consideration is not yet due. Changes in contract assets during the three months ended March 31, 2021 were primarily attributable to revenue recognized due to the delivery of LNG under certain SPAs for which the associated consideration was not yet due.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Deferred Revenue Reconciliation

The following table reflects the changes in our contract liabilities, which we classify as deferred revenue on our Balance Sheets (in millions):



	Three Months Ended March 31, 2021
Deferred revenues, beginning of period	$	i 114
Cash received but not yet recognized in revenue	i 79
Revenue recognized from prior period deferral	( i 114)
Deferred revenues, end of period	$	i 79

The following table reflects the changes in our contract liabilities to affiliate, which we classify as deferred revenue—affiliate on our Balance Sheets (in millions):


	Three Months Ended March 31, 2021

Deferred revenues—affiliate, beginning of period	$	i —
Cash received but not yet recognized in revenue	i 5

Deferred revenues—affiliate, end of period	$	i 5

Transaction Price Allocated to Future Performance Obligations

Because many of our sales contracts have long-term durations, we are contractually entitled to significant future consideration which we have not yet recognized as revenue. i The following table discloses the aggregate amount of the transaction price that is allocated to performance obligations that have not yet been satisfied as of March 31, 2021 and December 31, 2020:

Unsatisfied
Transaction Price
(in billions)

Weighted Average Recognition Timing (years) (1)

Unsatisfied
Transaction Price
(in billions)

Weighted Average Recognition Timing (years) (1)

LNG revenues

i 51.4

i 9

i 52.1

i 9

LNG revenues—affiliate

i 0.2

i 3

i 0.1

i 1

Total revenues

i 51.6

i 52.2

(1) The weighted average recognition timing represents an estimate of the number of years during which we shall have recognized half of the unsatisfied transaction price.

We have elected the following exemptions which omit certain potential future sources of revenue from the table above:

(1)We omit from the table above all performance obligations that are part of a contract that has an original expected duration of one year or less.

(2)The table above excludes substantially all variable consideration under our SPAs. We omit from the table above all variable consideration that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation when that performance obligation qualifies as a series. The amount of revenue from variable fees that is not included in the transaction price will vary based on the future prices of Henry Hub throughout the contract terms, to the extent customers elect to take delivery of their LNG, and adjustments to the consumer price index. Certain of our contracts contain additional variable consideration based on the outcome of contingent events and the movement of various indexes. We have not included such variable consideration in the transaction price to the extent the consideration is considered constrained due to the uncertainty of ultimate pricing and receipt. Approximately i 51% and i 44% of our LNG revenues from contracts included in the table above during the three months ended March 31, 2021 and 2020, respectively, were related to variable consideration received from customers.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

We may enter into contracts to sell LNG that are conditioned upon one or both of the parties achieving certain milestones such as reaching a final investment decision on a certain liquefaction Train, obtaining financing or achieving substantial completion of a Train and any related facilities. These contracts are considered completed contracts for revenue recognition purposes and are included in the transaction price above when the conditions are considered probable of being met.

NOTE 11— i RELATED PARTY TRANSACTIONS

Below is a summary of our related party transactions as reported on our Statements of Income for the three months ended March 31, 2021 and 2020 (in millions):

Three Months Ended March 31,

2021

2020

LNG revenues—affiliate

Cheniere Marketing Agreements

i 210

i 182

Contracts for Sale and Purchase of Natural Gas and LNG

i 4

i 6

Total LNG revenues—affiliate

i 214

i 188

Cost of sales—affiliate

Cheniere Marketing Agreements

i 34

i —

Cargo loading fees under TUA

i 11

Contracts for Sale and Purchase of Natural Gas and LNG

i 7

i 1

Total cost of sales—affiliate

i 52

i 12

Operating and maintenance expense—affiliate

TUA

i 66

i 67

Natural Gas Transportation Agreement

i 20

Services Agreements

i 27

i 26

Total operating and maintenance expense—affiliate

i 113

Operating and maintenance expense—related party

Natural Gas Transportation and Storage Agreements

i 10

i —

General and administrative expense—affiliate

Services Agreements

i 15

i 18

As of March 31, 2021 and December 31, 2020, we had $ i 99 million and $ i 185 million, respectively, of accounts receivable—affiliate under the agreements described below.

LNG Terminal-Related Agreements

Terminal Use Agreements

We have a TUA with SPLNG to provide berthing for LNG vessels and for the unloading, loading, storage and regasification of LNG. We have reserved approximately i 2 Bcf/d of regasification capacity and we are obligated to make monthly capacity payments to SPLNG aggregating approximately $ i 250 million per year (the “TUA Fees”), continuing until at least May 2036. We obtained this reserved capacity as a result of an assignment in July 2012 by Cheniere Investments of its rights, title and interest under its TUA.

Cheniere Partners has guaranteed our obligations under our TUA. Cargo loading fees incurred under the TUA are recorded as cost of sales—affiliate, except for the portion related to commissioning activities which is capitalized as LNG terminal construction-in-process.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Cheniere Marketing Agreements

Cheniere Marketing SPA

Cheniere Marketing has an SPA (“Base SPA”) with us to purchase, at Cheniere Marketing’s option, any LNG produced by us in excess of that required for other customers at a price of i 115% of Henry Hub plus $ i 3.00 per MMBtu of LNG.

In May 2019, we and Cheniere Marketing entered into an amendment to the Base SPA to remove certain conditions related to the sale of LNG from Trains 5 and 6 of the Liquefaction Project and provide that cargoes rejected by Cheniere Marketing under the Base SPA can be sold by us to Cheniere Marketing at a contract price equal to a portion of the estimated net profits from the sale of such cargo.

Cheniere Marketing Master SPA

We have an agreement with Cheniere Marketing that allows us to sell and purchase LNG with Cheniere Marketing by executing and delivering confirmations under this agreement. We executed a confirmation with Cheniere Marketing that obligated Cheniere Marketing in certain circumstances to buy LNG cargoes produced during the period while Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) had control of, and was commissioning, Train 5 of the Liquefaction Project.

Cheniere Marketing Letter Agreements

In February 2021, we and Cheniere Marketing entered into a letter agreement for the sale of up to i 31 cargoes to be delivered between 2021 and 2026 at a price of i 115% of Henry Hub plus $ i 1.72 per MMBtu.

In December 2020, we and Cheniere Marketing entered into a letter agreement for the sale of up to i 30 cargoes scheduled for delivery in 2021 at a price of i 115% of Henry Hub plus $ i 0.728 per MMBtu.

In December 2019, we and Cheniere Marketing entered into a letter agreement for the sale of up to i 43 cargoes that were delivered in 2020 at a price of i 115% of Henry Hub plus $ i 1.67 per MMBtu.

Facility Swap Agreement

In August 2020, we entered into an arrangement with subsidiaries of Cheniere to provide the ability, in limited circumstances, to potentially fulfill commitments to LNG buyers in the event operational conditions impact operations at either the Sabine Pass or Corpus Christi liquefaction facilities. The purchase price for such cargoes would be (i) i 115% of the applicable natural gas feedstock purchase price or (ii) a free-on-board U.S. Gulf Coast LNG market price, whichever is greater.

Natural Gas Transportation and Storage Agreements

To ensure we are able to transport adequate natural gas feedstock to the Sabine Pass LNG terminal, we have transportation agreements to secure firm pipeline transportation capacity with CTPL, a wholly owned subsidiary of Cheniere Partners, and third-party pipeline companies. These agreements with CTPL have a primary term that continues until i 20 years from May 2016 and thereafter continue in effect from year to year until terminated by either party upon written notice of i one year or the term of the agreements, whichever is less. In addition, we have the right to elect to extend the term of the agreements for up to i two consecutive terms of i 10 years. Maximum rates, charges and fees shall be applicable for the entitlements and quantities delivered pursuant to the agreements unless CTPL has advised us that it has agreed otherwise. As of both March 31, 2021 and December 31, 2020, we recorded due to affiliates of $ i 8 million and $ i 6 million, respectively, related to this agreement.

We are also party to various natural gas transportation and storage agreements with a related party in the ordinary course of business for the operation of the Liquefaction Project, with initial primary terms of up to i 10 years with extension rights. This related party is partially owned by the investment management company that acquired a portion of Cheniere Partners’ limited partner interests in September 2020. We recorded operating and maintenance expense—related party of $ i 10 million in the three months ended March 31, 2021 and accrued liabilities—related party of $ i 3 million and $ i 4 million as of March 31, 2021 and December 31, 2020, respectively, with this related party.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Services Agreements

As of March 31, 2021 and December 31, 2020, we had $ i 109 million and $ i 122 million of advances to affiliates, respectively, under the services agreements described below. The non-reimbursement amounts incurred under these agreements are recorded in general and administrative expense—affiliate.

Cheniere Investments Information Technology Services Agreement

Cheniere Investments has an information technology services agreement with Cheniere, pursuant to which Cheniere Investments’ subsidiaries, including us, receive certain information technology services. On a quarterly basis, the various entities receiving the benefit are invoiced by Cheniere Investments according to the cost allocation percentages set forth in the agreement. In addition, Cheniere is entitled to reimbursement for all costs incurred by Cheniere that are necessary to perform the services under the agreement.

Liquefaction O&M Agreement

We have an operation and maintenance agreement (the “Liquefaction O&M Agreement”) with Cheniere Investments, a wholly owned subsidiary of Cheniere Partners, pursuant to which we receive all of the necessary services required to construct, operate and maintain the Liquefaction Project. Before each Train of the Liquefaction Project is operational, the services to be provided include, among other services, obtaining governmental approvals on our behalf, preparing an operating plan for certain periods, obtaining insurance, preparing staffing plans and preparing status reports. After each Train is operational, the services include all necessary services required to operate and maintain the Train. Prior to the substantial completion of each Train of the Liquefaction Project, in addition to reimbursement of operating expenses, we are required to pay a monthly fee equal to i 0.6% of the capital expenditures incurred in the previous month. After substantial completion of each Train, for services performed while the Train is operational, we will pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $ i 83,333 (indexed for inflation) for services with respect to the Train.

Liquefaction MSA

We have a management services agreement (the “Liquefaction MSA”) with Cheniere Terminals pursuant to which Cheniere Terminals manages the construction and operation of the Liquefaction Project, excluding those matters provided for under the Liquefaction O&M Agreement. The services include, among other services, exercising the day-to-day management of our affairs and business, managing our regulatory matters, managing bank and brokerage accounts and financial books and records of our business and operations, entering into financial derivatives on our behalf and providing contract administration services for all contracts associated with the Liquefaction Project. Prior to the substantial completion of each Train of the Liquefaction Project, we pay a monthly fee equal to i 2.4% of the capital expenditures incurred in the previous month. After substantial completion of each Train, we will pay a fixed monthly fee of $ i 541,667 (indexed for inflation) for services with respect to such Train.

Natural Gas Supply Agreement

We are a party to a natural gas supply agreement with a related party in the ordinary course of business, to obtain a fixed minimum daily volume of feed gas for the operation of the Liquefaction Project. This related party is partially owned by Blackstone, who also partially owns Cheniere Partners’ limited partner interests. The term of the agreement is for i five years, which can commence no earlier than November 1, 2021 and no later than November 1, 2022, following the achievement of contractually-defined conditions precedent.

LNG Site Sublease Agreement

We have agreements with SPLNG to sublease a portion of the Sabine Pass LNG terminal site for the Liquefaction Project. The aggregate annual sublease payment is $ i 1 million. The initial terms of the subleases expire on December 31, 2034, with options to renew for multiple periods of i 10 years with similar terms as the initial terms. The annual sublease payments will be adjusted for inflation every i five years based on a consumer price index, as defined in the sublease agreements.

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Cooperation Agreement

We have a cooperation agreement with SPLNG that allows us to retain and acquire certain rights to access the property and facilities that are owned by SPLNG for the purpose of constructing, modifying and operating the Liquefaction Project. In consideration for access given to us, we have agreed to transfer to SPLNG title of certain facilities, equipment and modifications, which SPLNG is obligated to operate and maintain. The term of this agreement is consistent with our TUA described above. We conveyed $ i 5 million in assets to SPLNG under this agreement during the three months ended March 31, 2020. We did i not convey any assets to SPLNG under this agreement during the three months ended March 31, 2021.

Contracts for Sale and Purchase of Natural Gas and LNG

We have agreements with SPLNG, CTPL and CCL that allow us to sell and purchase natural gas and LNG with each party. Natural gas purchased under these agreements is initially recorded as inventory and then to cost of sales—affiliate upon its sale, except for purchases related to commissioning activities which are capitalized as LNG terminal construction-in-process. Natural gas sold under these agreements is recorded as LNG revenues—affiliate.

State Tax Sharing Agreement

We have a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which we and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, we will pay to Cheniere an amount equal to the state and local tax that we would be required to pay if our state and local tax liability were calculated on a separate company basis. There have been i no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from us under this agreement; therefore, Cheniere has not demanded any such payments from us. The agreement is effective for tax returns due on or after August 2012.

NOTE 12— i CUSTOMER CONCENTRATION

The following table shows external customers with revenues of 10% or greater of total revenues from external customers and external customers with accounts receivable, net and contract assets, net balances of 10% or greater of total accounts receivable, net and contract assets, net from external customers:

Percentage of Total Revenues from External Customers

Percentage of Accounts Receivable, Net from External Customers

Three Months Ended March 31,

March 31,