SEC Info - Cheniere Corpus Christi Holdings, LLC, et al.

We have served as the Company’s auditor since 2015.

Houston, Texas

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)



	December 31,
	2019		2018
ASSETS
Current assets
Cash and cash equivalents	$	i —	$	i —
Restricted cash	i 79,741		i 289,141
Accounts and other receivables	i 57,712		i 24,989
Accounts receivable—affiliate	i 57,211		i 21,060
Advances to affiliate	i 115,476		i 94,397
Inventory	i 69,179		i 26,198
Derivative assets	i 73,809		i 15,627
Derivative assets—related party	i 2,623		i 2,132
Other current assets	i 14,852		i 15,217
Other current assets—affiliate	i 5		i 633
Total current assets	i 470,608		i 489,394

Property, plant and equipment, net	i 12,507,419		i 11,138,825
Debt issuance and deferred financing costs, net	i 14,705		i 38,012
Non-current derivative assets	i 61,217		i 19,032
Non-current derivative assets—related party	i 1,933		i 3,381
Other non-current assets, net	i 55,630		i 31,709
Total assets	$	i 13,111,512	$	i 11,720,353

LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable	$	i 7,290	$	i 16,202
Accrued liabilities	i 369,980		i 162,205
Accrued liabilities—related party	i 2,531		i —
Current debt	i —		i 168,000
Due to affiliates	i 26,900		i 25,086
Derivative liabilities	i 46,486		i 13,576
Other current liabilities	i 364		i —
Other current liabilities—affiliate	i 519		i —
Total current liabilities	i 454,070		i 385,069

Long-term debt, net	i 10,093,480		i 9,245,552
Non-current derivative liabilities	i 134,667		i 8,595
Other non-current liabilities	i 10,433		i —
Other non-current liabilities—affiliate	i 1,284		i —

Commitments and contingencies (see Note 13)	i		i

Member’s equity	i 2,417,578		i 2,081,137
Total liabilities and member’s equity	$	i 13,111,512	$	i 11,720,353

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)



	Year Ended December 31,
	2019			2018			2017
Revenues
LNG revenues	$	i 679,070		$	i —		$	i —
LNG revenues—affiliate	i 726,100			i —			i —
Total revenues	i 1,405,170			i —			i —

Operating costs and expenses (recoveries)
Cost of sales (excluding depreciation and amortization expense shown separately below)	i 691,301			i 172			i 91
Cost of sales—affiliate	i 3,015			i —			i —
Cost of sales—related party	i 85,429			i —			i —
Operating and maintenance expense (recovery)	i 242,027			( i 96		)	i 3,024
Operating and maintenance expense—affiliate	i 59,319			i 4,283			i 2,401
Development expense	i 596			i 177			i 516
Development expense—affiliate	i 61			i —			i 8
General and administrative expense	i 6,106			i 5,263			i 5,551
General and administrative expense—affiliate	i 11,352			i 2,201			i 1,173
Depreciation and amortization expense	i 230,780			i 9,859			i 892
Impairment expense and loss on disposal of assets	i 364			i 20			i 5,505
Total operating costs and expenses	i 1,330,350			i 21,879			i 19,161

Income (loss) from operations	i 74,820			( i 21,879		)	( i 19,161		)

Other income (expense)
Interest expense, net of capitalized interest	( i 278,035		)	i —			i —
Loss on modification or extinguishment of debt	( i 41,296		)	( i 15,332		)	( i 32,480		)
Derivative gain (loss), net	( i 133,427		)	i 43,105			i 3,249
Other income (expense)	i 3,642			i 392			( i 260		)
Total other income (expense)	( i 449,116		)	i 28,165			( i 29,491		)

Net income (loss)	$	( i 374,296	)	$	i 6,286		$	( i 48,652	)

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEMBER’S EQUITY

(in thousands)



	Cheniere CCH HoldCo I, LLC			Total Member’s Equity
Balance at December 31, 2016	$	i 1,313,809		$	i 1,313,809
Capital contributions	i 402,119			i 402,119
Net loss	( i 48,652		)	( i 48,652		)
Balance at December 31, 2017	i 1,667,276			i 1,667,276
Capital contributions	i 407,575			i 407,575
Net income	i 6,286			i 6,286
Balance at December 31, 2018	i 2,081,137			i 2,081,137
Capital contributions	i 710,737			i 710,737
Net loss	( i 374,296		)	( i 374,296		)
Balance at December 31, 2019	$	i 2,417,578		$	i 2,417,578

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



	Year Ended December 31,
	2019			2018			2017
Cash flows from operating activities
Net income (loss)	$	( i 374,296	)	$	i 6,286		$	( i 48,652	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expense	i 230,780			i 9,859			i 892
Amortization of discount and debt issuance costs	i 15,953			i —			i —
Loss on modification or extinguishment of debt	i 41,296			i 15,332			i 32,480
Total losses (gains) on derivatives, net	i 88,052			( i 43,128		)	( i 3,158		)
Total losses on derivatives, net—related party	i 957			i —			i —
Net cash used for settlement of derivative instruments	( i 29,437		)	( i 7,222		)	( i 50,981		)
Impairment expense and loss on disposal of assets	i 364			i 20			i 5,505
Other	i 1,603			i —			i —
Changes in operating assets and liabilities:
Accounts receivable	( i 57,654		)	i —			i —
Accounts receivable—affiliate	( i 57,203		)	i —			i —
Advances to affiliate	( i 53,231		)	( i 10,911		)	i —
Inventory	( i 36,885		)	( i 24,852		)	i —
Accounts payable and accrued liabilities	i 174,471			i 10,354			i 152
Accrued liabilities—related party	i 2,531			i —			i —
Due to affiliates	i 15,368			i 530			i 1,567
Other, net	i 3,863			( i 16,313		)	( i 1,454		)
Other, net—affiliate	i 95			( i 117		)	( i 667		)
Net cash used in operating activities	( i 33,373		)	( i 60,162		)	( i 64,316		)

Cash flows from investing activities
Property, plant and equipment, net	( i 1,517,162		)	( i 2,962,936		)	( i 1,987,254		)
Other	( i 2,058		)	i 2,669			i 25,045
Net cash used in investing activities	( i 1,519,220		)	( i 2,960,267		)	( i 1,962,209		)

Cash flows from financing activities
Proceeds from issuances of debt	i 4,203,550			i 3,114,800			i 3,040,000
Repayments of debt	( i 3,543,757		)	( i 301,455		)	( i 1,436,050		)
Debt issuance and deferred financing costs	( i 16,210		)	( i 45,743		)	( i 23,496		)
Debt extinguishment cost	( i 11,127		)	( i 9,108		)	( i 29		)
Capital contributions	i 710,737			i 324,517			i 402,119
Net cash provided by financing activities	i 1,343,193			i 3,083,011			i 1,982,544

Net increase (decrease) in cash, cash equivalents and restricted cash	( i 209,400		)	i 62,582			( i 43,981		)
Cash, cash equivalents and restricted cash—beginning of period	i 289,141			i 226,559			i 270,540
Cash, cash equivalents and restricted cash—end of period	$	i 79,741		$	i 289,141		$	i 226,559

Balances per Consolidated Balance Sheets:



	December 31,
	2019		2018
Cash and cash equivalents	$	i —	$	i —
Restricted cash	i 79,741		i 289,141
Total cash, cash equivalents and restricted cash	$	i 79,741	$	i 289,141

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1— i ORGANIZATION AND NATURE OF OPERATIONS

CCH is a Houston-based Delaware limited liability company formed in September 2014 by Cheniere to hold its limited partner interest in CCP and its equity interests in CCL and CCP GP. We are operating and constructing a natural gas liquefaction and export facility (the “Liquefaction Facilities”) and operating a i 23-mile natural gas supply pipeline that interconnects the Corpus Christi LNG terminal with several interstate and intrastate natural gas pipelines (the “Corpus Christi Pipeline” and together with the Liquefaction Facilities, the “Liquefaction Project”) near Corpus Christi, Texas, through our subsidiaries CCL and CCP, respectively. We are currently operating i two Trains and are constructing i one additional Train for a total production capacity of approximately i 15 mtpa of LNG. The Liquefaction Project, once fully constructed, will contain i three LNG storage tanks and i two marine berths.

NOTE 2— i SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our Consolidated Financial Statements have been prepared in accordance with GAAP. Our Consolidated Financial Statements include the accounts of CCH and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on our consolidated financial position, results of operations or cash flows.

Recent Accounting Standards

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and subsequent amendments thereto on January 1, 2019 using the optional transition approach to apply the standard at the beginning of the first quarter of 2019 with no retrospective adjustments to prior periods. This standard requires a lessee to recognize leases on its balance sheet by recording a lease 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. The adoption of the standard did not materially impact our Consolidated Financial Statements. Upon adoption of the standard, we recorded right-of-use assets of $ i 8.1 million in other non-current assets, net, and lease liabilities of $ i 0.5 million in other current liabilities—affiliate, $ i 5.2 million other non-current liabilities and $ i 1.2 million in other non-current liabilities—affiliate.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance retrospectively eliminates the requirement to allocate the consolidated amount of current and deferred tax expense to entities that are not subject to income tax. We early adopted this guidance effective December 31, 2019 and recorded a cumulative-effect adjustment to retained earnings of $ i 2.1 million on our subsidiaries’ financial statements, that has been eliminated upon consolidated on our Consolidated Financial Statements. The provision for income taxes, taxes payable and deferred income tax balances have been retrospectively removed from our subsidiaries’ financial statements. The deferred tax assets were offset with a full valuation allowance and therefore no cumulative effect adjustment to retained earnings was required on our Consolidated Financial Statements.

Use of Estimates

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Management evaluates its estimates and related assumptions regularly, including those related to fair value measurements, revenue recognition, property, plant and equipment, derivative instruments and asset retirement obligations (“AROs”), as further discussed under the respective sections within this note. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.

Fair Value Measurements

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs that are directly or indirectly observable for the asset or liability, other than quoted prices included within Level 1. Hierarchy Level 3 inputs are inputs that are not observable in the market.

In determining fair value, we use observable market data when available, or models that incorporate observable market data. In addition to market information, we incorporate transaction-specific details that, in management’s judgment, market participants would take into account in measuring fair value. We maximize the use of observable inputs and minimize our use of unobservable inputs in arriving at fair value estimates.

Recurring fair-value measurements are performed for derivative instruments as disclosed in Note 7—Derivative Instruments. The carrying amount of restricted cash, accounts receivables and accounts payable reported on the Consolidated Balance Sheets approximates fair value. The fair value of debt is the estimated amount we would have to pay to repurchase our debt in the open market, including any premium or discount attributable to the difference between the stated interest rate and market interest rate at each balance sheet date. Debt fair values, as disclosed in Note 10—Debt, are based on quoted market prices for identical instruments, if available, or based on valuations of similar debt instruments using observable or unobservable inputs. Non-financial assets and liabilities initially measured at fair value include AROs.

Revenue Recognition

We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. Revenues from the sale of LNG are recognized as LNG revenues. See Note 11—Revenues from Contracts with Customers for further discussion of revenues.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Restricted Cash

Accounts Receivable

Accounts receivable is reported net of any allowances for doubtful accounts. We periodically review the collectability on our accounts receivable and recognize an allowance if there is probability of non-collection, based on historical write-off and customer-specific factors. We did i not have an allowance on our accounts receivable as of December 31, 2019 and 2018.

Inventory

LNG and natural gas inventory are recorded at the lower of weighted average cost and net realizable value. Materials and other inventory are recorded at the lower of cost and net realizable value and subsequently charged to expense when issued.

Accounting for LNG Activities

Generally, we begin capitalizing the costs of our LNG terminal once the individual project meets the following criteria: (1) regulatory approval has been received, (2) financing for the project is available and (3) management has committed to commence construction. Prior to meeting these criteria, most of the costs associated with a project are expensed as incurred. These costs primarily include professional fees associated with preliminary front-end engineering and design work, costs of securing necessary regulatory approvals and other preliminary investigation and development activities related to our LNG terminal.

Generally, costs that are capitalized prior to a project meeting the criteria otherwise necessary for capitalization include: land acquisition costs, detailed engineering design work and certain permits that are capitalized as other non-current assets. The costs of lease options are amortized over the life of the lease once obtained. If no land or lease is obtained, the costs are expensed.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Expenditures for construction and commissioning activities, major renewals and betterments that extend the useful life of an asset are capitalized, while expenditures for maintenance and repairs (including those for planned major maintenance projects) to maintain property, plant and equipment in operating condition are generally expensed as incurred. We realize offsets to LNG terminal costs for sales of commissioning cargoes that were earned or loaded prior to the start of commercial operations of the respective Train during the testing phase for its construction. We depreciate our property, plant and equipment using the straight-line depreciation method. Upon retirement or other disposition of property, plant and equipment, the cost and related accumulated depreciation are removed from the account, and the resulting gains or losses are recorded in impairment expense and loss (gain) on disposal of assets.

Management tests property, plant and equipment for impairment whenever events or changes in circumstances have indicated that the carrying amount of property, plant and equipment might not be recoverable. Assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of the cash flows of other groups of assets for purposes of assessing recoverability. Recoverability generally is determined by comparing the carrying value of the asset to the expected undiscounted future cash flows of the asset. If the carrying value of the asset is not recoverable, the amount of impairment loss is measured as the excess, if any, of the carrying value of the asset over its estimated fair value. During the year ended December 31, 2017, we recognized $ i 5.5 million of impairment expense related to damaged infrastructure as an effect of Hurricane Harvey. We did i not record any impairments related to property, plant and equipment during the years ended December 31, 2019 and 2018.

Interest Capitalization

We capitalize interest costs during the construction period of our LNG terminal and related assets as construction-in-process. Upon commencement of operations, these costs are transferred out of construction-in-process into terminal and interconnecting pipeline facilities assets and are amortized over the estimated useful life of the asset.

Regulated Natural Gas Pipelines

The Corpus Christi Pipeline is subject to the jurisdiction of the FERC in accordance with the Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978. The economic effects of regulation can result in a regulated company recording as assets those costs that have been or are expected to be approved for recovery from customers, or recording as liabilities those amounts that are expected to be required to be returned to customers, in a rate-setting process in a period different from the period in which the amounts would be recorded by an unregulated enterprise. Accordingly, we record assets and liabilities that result from the regulated rate-making process that may not be recorded under GAAP for non-regulated entities. We continually assess whether regulatory assets are probable of future recovery by considering factors such as applicable regulatory changes and recent rate orders applicable to other regulated entities. Based on this continual assessment, we believe the existing regulatory assets are probable of recovery. These regulatory assets and liabilities are primarily classified in our Consolidated Balance Sheets as other assets and other liabilities. We periodically evaluate their applicability under GAAP, and consider factors such as regulatory changes and the effect of competition. If cost-based regulation ends or competition increases, we may have to reduce our asset balances to reflect a market basis less than cost and write off the associated regulatory assets and liabilities.

Items that may influence our assessment are:


•	inability to recover cost increases due to rate caps and rate case moratoriums;


•	inability to recover capitalized costs, including an adequate return on those costs through the rate-making process and the FERC proceedings;


•	excess capacity;


•	increased competition and discounting in the markets we serve; and


•	impacts of ongoing regulatory initiatives in the natural gas industry.

Natural gas pipeline costs include amounts capitalized as an Allowance for Funds Used During Construction (“AFUDC”). The rates used in the calculation of AFUDC are determined in accordance with guidelines established by the FERC. AFUDC represents the cost of debt and equity funds used to finance our natural gas pipeline additions during construction. AFUDC is capitalized as a part of the cost of our natural gas pipeline. Under regulatory rate practices, we generally are permitted to recover AFUDC, and a fair return thereon, through our rate base after the natural gas pipelines are placed in service.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Derivative Instruments

We use derivative instruments to hedge our exposure to cash flow variability from interest rate and commodity price risk. Derivative instruments are recorded at fair value and included in our Consolidated Balance Sheets as assets or liabilities depending on the derivative position and the expected timing of settlement, unless they satisfy criteria for, and we elect, the normal purchases and sales exception. When we have the contractual right and intend to net settle, derivative assets and liabilities are reported on a net basis.

Changes in the fair value of our derivative instruments are recorded in earnings, unless we elect to apply hedge accounting and meet specified criteria. We did i not have any derivative instruments designated as cash flow or fair value hedges during the years ended December 31, 2019, 2018 and 2017. See Note 7—Derivative Instruments for additional details about our derivative instruments.

Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of restricted cash, derivative instruments and accounts receivable. We maintain cash balances at financial institutions, which may at times be in excess of federally insured levels. We have not incurred losses related to these balances to date.

The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments. Certain of our commodity derivative transactions are executed through over-the-counter contracts which are subject to nominal credit risk as these transactions are settled on a daily margin basis with investment grade financial institutions. Collateral deposited for such contracts is recorded within other current assets. Our interest rate derivative instruments are placed with investment grade financial institutions whom we believe are acceptable credit risks. We monitor counterparty creditworthiness on an ongoing basis; however, we cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, we may be limited in our ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, we may not realize the benefit of some of our derivative instruments.

CCL has entered into fixed price long-term SPAs generally with terms of i 20 years with i nine third parties and have entered into agreements with Cheniere Marketing International LLP (“Cheniere Marketing”). CCL is dependent on the respective customers’ creditworthiness and their willingness to perform under their respective SPAs. See Note 14—Customer Concentration for additional details about our customer concentration.

Debt

Our debt consists of current and long-term secured and unsecured debt securities and credit facilities with banks and other lenders. Debt issuances are placed directly by us or through securities dealers or underwriters and are held by institutional and retail investors.

Debt is recorded on our Consolidated Balance Sheets at par value adjusted for unamortized discount or premium and net of unamortized debt issuance costs related to term notes. Debt issuance costs consist primarily of arrangement fees, professional fees, legal fees and printing costs. If debt issuance costs are incurred in connection with a line of credit arrangement or on undrawn funds, they are presented as an asset on our Consolidated Balance Sheets. Discounts, premiums and debt issuance costs directly related to the issuance of debt are amortized over the life of the debt and are recorded in interest expense, net of capitalized interest using the effective interest method. Gains and losses on the extinguishment or modification of debt are recorded in gain (loss) on modification or extinguishment of debt on our Consolidated Statements of Operations.

Asset Retirement Obligations

We recognize AROs for legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the asset and for conditional AROs in which the timing or method of settlement are conditional on a future event that may or may not be within our control. The fair value of a liability for an ARO is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset. This additional carrying amount is depreciated over the estimated useful life of the asset.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

We have i not recorded an ARO associated with the Corpus Christi Pipeline. We believe that it is not feasible to predict when the natural gas transportation services provided by the Corpus Christi Pipeline will no longer be utilized. In addition, our right-of-way agreements associated with the Corpus Christi Pipeline have no stipulated termination dates. We intend to operate the Corpus Christi Pipeline as long as supply and demand for natural gas exists in the United States and intend to maintain it regularly.

Income Taxes

We are a disregarded entity for federal and state income tax purposes. Our taxable income or loss, which may vary substantially from the net income or loss reported on our Consolidated Statements of Operations, is included in the consolidated federal income tax return of Cheniere. Accordingly, i no provision or liability for federal or state income taxes is included in the accompanying Consolidated Financial Statements.

Business Segment

Our liquefaction and pipeline business at the Corpus Christi LNG terminal represents a single reportable segment. Our chief operating decision maker reviews the financial results of CCH in total when evaluating financial performance and for purposes of allocating resources.

NOTE 3— 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 Consolidated Balance Sheets. i As of December 31, 2019 and 2018, restricted cash consisted of the following (in thousands):



	December 31,
	2019		2018
Current restricted cash
Liquefaction Project	$	i 79,741	$	i 289,141

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.

NOTE 4— i ACCOUNTS AND OTHER RECEIVABLES

As of December 31, 2019 and 2018, accounts and other receivables consisted of the following (in thousands):



	December 31,
	2019		2018
Trade receivable	$	i 44,403	$	i 51
Other accounts receivable	i 13,309		i 24,938
Total accounts and other receivables	$	i 57,712	$	i 24,989

NOTE 5— i INVENTORY

As of December 31, 2019 and 2018, inventory consisted of the following (in thousands):



	December 31,
	2019		2018
Natural gas	$	i 6,870	$	i 1,326
LNG	i 6,103		i —
Materials and other	i 56,206		i 24,872
Total inventory	$	i 69,179	$	i 26,198

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTE 6— i PROPERTY, PLANT AND EQUIPMENT

As of December 31, 2019 and 2018, property, plant and equipment, net consisted of the following (in thousands):



	December 31,
	2019			2018
LNG terminal costs
LNG terminal and interconnecting pipeline facilities	$	i 10,027,111		$	i 618,547
LNG site and related costs	i 275,959			i 44,725
LNG terminal construction-in-process	i 2,425,226			i 10,470,577
Accumulated depreciation	( i 232,451		)	( i 7,416		)
Total LNG terminal costs, net	i 12,495,845			i 11,126,433
Fixed assets
Fixed assets	i 19,083			i 15,534
Accumulated depreciation	( i 7,509		)	( i 3,142		)
Total fixed assets, net	i 11,574			i 12,392
Property, plant and equipment, net	$	i 12,507,419		$	i 11,138,825

Depreciation expense was $ i 230.0 million, $ i 9.5 million and $ i 0.8 million during the years ended December 31, 2019, 2018 and 2017, respectively.

We realized offsets to LNG terminal costs of $ i 156.1 million and $ i 48.7 million during the years ended December 31, 2019 and 2018, respectively, that were related to the sale of commissioning cargoes because these amounts were earned or loaded prior to the start of commercial operations of the Liquefaction Project, during the testing phase for its construction. We did i not realize any offsets to LNG terminal costs during the year ended December 31, 2017.

LNG Terminal Costs

LNG terminal costs related to the Liquefaction Project are depreciated using the straight-line depreciation method applied to groups of LNG terminal assets with varying useful lives. i The identifiable components of the Liquefaction Project have depreciable lives between i 10 and i 50 years, as follows:



Components		Useful life (yrs)
Water pipelines		i 30
Natural gas pipeline facilities		i 40
Liquefaction processing equipment		10-50
Other		15-30

Fixed Assets and Other

Our fixed assets and other are recorded at cost and are depreciated on a straight-line method based on estimated lives of the individual assets or groups of assets.

NOTE 7— i DERIVATIVE INSTRUMENTS

We have entered into the following derivative instruments that are reported at fair value:

•

interest rate swaps (“Interest Rate Derivatives”) to hedge the exposure to volatility in a portion of the floating-rate interest payments on our amended and restated credit facility (the “CCH Credit Facility”) and to hedge against changes in interest rates that could impact anticipated future issuance of debt (“Interest Rate Forward Start Derivatives” and, collectively with the Interest Rate Derivatives, “CCH Interest Rate Derivatives”) and


•	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 (collectively, the “Liquefaction Supply Derivatives”).

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

We recognize our derivative instruments as either assets or liabilities and measure those instruments at fair value. None of our derivative instruments are designated as cash flow or fair value hedging instruments, and changes in fair value are recorded within our Consolidated Statements of Operations to the extent not utilized for the commissioning process.

The following table shows the fair value of our derivative instruments that are required to be measured at fair value on a recurring basis as of December 31, 2019 and 2018, which are classified as derivative assets, derivative assets—related party, non-current derivative assets, non-current derivative assets—related party, derivative liabilities or non-current derivative liabilities in our Consolidated Balance Sheets (in thousands):

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

Interest Rate Derivatives asset (liability)

i —

( i 80,645

)

i —

( i 80,645

)

i —

i 18,069

i —

i 18,069

Interest Rate Forward Start Derivatives liability

i —

( i 7,582

)

i —

( i 7,582

)

i —

Liquefaction Supply Derivatives asset (liability)

i 2,383

i 9,198

i 35,075

i 46,656

i 1,299

i 2,990

( i 4,357

)

( i 68

)

We value our CCH Interest Rate Derivatives using an income-based approach, utilizing observable inputs to the valuation model including interest rate curves, risk adjusted discount rates, credit spreads and other relevant data. We value our 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 conditions precedent, 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 December 31, 2019 and 2018, 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 December 31, 2019:



	Net Fair Value Asset (in thousands)	Valuation Approach	Significant Unobservable Input	Significant Unobservable Inputs Range
Physical Liquefaction Supply Derivatives	$ i 35,075	Market approach incorporating present value techniques	Henry Hub basis spread	$(0.718) - $0.050
		Option pricing model	International LNG pricing spread, relative to Henry Hub (1)	86% - 191%

(1) Spread contemplates U.S. dollar-denominated pricing.

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The following table shows the changes in the fair value of our Level 3 Physical Liquefaction Supply Derivatives, including those with related parties, during the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019			2018			2017
Balance, beginning of period	$	( i 4,357	)	$	( i 91	)	$	i —
Realized and mark-to-market gains (losses):
Included in cost of sales	( i 82,645		)	( i 9,944		)	i —
Purchases and settlements:
Purchases	i 120,755			i 5,678			( i 91		)
Settlements	i 1,432			i —			i —
Transfers out of Level 3 (1)	( i 110		)	i —			i —
Balance, end of period	$	i 35,075		$	( i 4,357	)	$	( i 91	)
Change in unrealized losses relating to instruments still held at end of period	$	( i 82,645	)	$	( i 9,944	)	$	i —


(1)	Transferred to Level 2 as a result of observable market for the underlying natural gas purchase agreements.

Derivative assets and liabilities arising from our derivative contracts with the same counterparty are reported on a net basis, as all counterparty derivative contracts provide for the unconditional right of set-off in the event of default. The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments in instances when our derivative instruments are in an asset position. Additionally, counterparties are at risk that we will be unable to meet our commitments in instances where our derivative instruments are in a liability position. We incorporate both our own nonperformance risk and the respective counterparty’s nonperformance risk in fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of any applicable credit enhancements, such as collateral postings, set-off rights and guarantees.

CCH Interest Rate Derivatives

CCH has entered into interest rate swaps to protect against volatility of future cash flows and hedge a portion of the variable interest payments on the CCH Credit Facility.

In June and July of 2019, we entered into the Interest Rate Forward Start Derivatives to hedge against changes in interest rates that could impact anticipated future issuance of debt by CCH, which is anticipated by the end of 2020. In November 2019, we settled a portion of the Interest Rate Forward Start Derivatives in conjunction with the prepayment of $ i 1.5 billion of commitments under the CCH Credit Facility. In June 2018, we settled a portion of the Interest Rate Derivatives in conjunction with the amendment of the CCH Credit Facility.

As of December 31, 2019, we had the following CCH Interest Rate Derivatives outstanding:

Notional Amounts

Effective Date

Maturity Date

Weighted Average Fixed Interest Rate Paid

Variable Interest Rate Received

Interest Rate Derivatives

$ i 4.5 billion

$ i 4.0 billion

i May 20, 2015

i May 31, 2022

i 2.30%

One-month LIBOR

Interest Rate Forward Start Derivatives

$ i 750 million

i —

i September 30, 2020

i December 31, 2030

i 2.06%

Three-month LIBOR

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The following table shows the fair value and location of our CCH Interest Rate Derivatives on our Consolidated Balance Sheets (in thousands):

Interest Rate Derivatives

Interest Rate Forward Start Derivatives

Total

Interest Rate Derivatives

Interest Rate Forward Start Derivatives

Total

Consolidated Balance Sheet Location

Derivative assets

i —

i 10,556

i —

i 10,556

Non-current derivative assets

i —

i 7,918

i —

i 7,918

Total derivative assets

i —

i 18,474

i —

i 18,474

Derivative liabilities

( i 31,984

)

( i 7,582

)

( i 39,566

)

( i 7

)

i —

( i 7

)

Non-current derivative liabilities

( i 48,661

)

i —

( i 48,661

)

( i 398

)

i —

( i 398

)

Total derivative liabilities

( i 80,645

)

( i 7,582

)

( i 88,227

)

( i 405

)

i —

( i 405

)

Derivative asset (liability), net

( i 80,645

)

( i 7,582

)

( i 88,227

)

i 18,069

i —

i 18,069

The following table shows the changes in the fair value and settlements of our CCH Interest Rate Derivatives recorded in derivative gain (loss), net on our Consolidated Statements of Operations during the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019			2018		2017
Interest Rate Derivatives gain (loss)	$	( i 100,508	)	$	i 43,105	$	i 3,249
Interest Rate Forward Start Derivatives loss	( i 32,919		)	i —		i —

Liquefaction Supply Derivatives

CCL has 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 eight years, some of which commence upon the satisfaction of certain conditions precedent.

The forward notional for our Liquefaction Supply Derivatives was approximately i 3,153 TBtu and i 2,854 TBtu as of December 31, 2019 and 2018, respectively, of which i 120 TBtu and i 55 TBtu, respectively, were for a natural gas supply contract CCL has with a related party.

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



	Fair Value Measurements as of (1)
Consolidated Balance Sheet Location	December 31, 2019			December 31, 2018
Derivative assets	$	i 73,809		$	i 5,071
Derivative assets—related party	i 2,623			i 2,132
Non-current derivative assets	i 61,217			i 11,114
Non-current derivative assets—related party	i 1,933			i 3,381
Total derivative assets	i 139,582			i 21,698

Derivative liabilities	( i 6,920		)	( i 13,569		)
Non-current derivative liabilities	( i 86,006		)	( i 8,197		)
Total derivative liabilities	( i 92,926		)	( i 21,766		)

Derivative asset (liability), net	$	i 46,656		$	( i 68	)


(1)	Does not include collateral posted with counterparties by us of $ i 4.5 million for such contracts, which are included in other current assets in our Consolidated Balance Sheets as of both December 31, 2019 and 2018.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The following table shows the changes in the fair value, settlements and location of our Liquefaction Supply Derivatives recorded on our Consolidated Statements of Operations during the years ended December 31, 2019, 2018 and 2017 (in thousands):

Year Ended December 31,

Consolidated Statements of Operations Location (1)

2019

2018

2017

Liquefaction Supply Derivatives gain

LNG revenues

i 227

i —

Liquefaction Supply Derivatives gain (loss)

Cost of sales

i 45,148

i 23

( i 91

)

Liquefaction Supply Derivatives loss

Cost of sales—related party

( i 957

)

i —


(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.

Consolidated Balance Sheet Presentation

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

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 December 31, 2019

Interest Rate Derivatives

( i 80,645

)

i —

( i 80,645

)

Interest Rate Forward Start Derivatives

( i 7,582

)

i —

( i 7,582

)

Liquefaction Supply Derivatives

i 145,135

( i 5,553

)

i 139,582

Liquefaction Supply Derivatives

( i 98,625

)

i 5,699

( i 92,926

)

As of December 31, 2018

Interest Rate Derivatives

i 19,520

( i 1,046

)

i 18,474

Interest Rate Derivatives

( i 413

)

i 8

( i 405

)

Liquefaction Supply Derivatives

i 31,770

( i 10,072

)

i 21,698

Liquefaction Supply Derivatives

( i 29,996

)

i 8,230

( i 21,766

)

NOTE 8— i OTHER NON-CURRENT ASSETS

As of December 31, 2019 and 2018, other non-current assets, net consisted of the following (in thousands):



	December 31,
	2019		2018
Advances and other asset conveyances to third parties to support LNG terminal	$	i 18,703	$	i 18,209
Operating lease assets	i 7,215		i —
Tax-related payments and receivables	i 3,200		i 3,783
Information technology service prepayments	i 3,010		i 2,435
Advances made under EPC and non-EPC contracts	i 14,067		i —
Other	i 9,435		i 7,282
Total other non-current assets, net	$	i 55,630	$	i 31,709

NOTE 9— i ACCRUED LIABILITIES

As of December 31, 2019 and 2018, accrued liabilities consisted of the following (in thousands):



	December 31,
	2019		2018
Interest costs and related debt fees	$	i 7,950	$	i 994
Accrued natural gas purchases	i 132,148		i 91,910
Liquefaction Project costs	i 192,215		i 46,964
Other	i 37,667		i 22,337
Total accrued liabilities	$	i 369,980	$	i 162,205

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTE 10— i DEBT

As of December 31, 2019 and 2018, our debt consisted of the following (in thousands):



	December 31,
	2019			2018
Long-term debt
7.000% Senior Secured Notes due 2024 (“2024 CCH Senior Notes”)	$	i 1,250,000		$	i 1,250,000
5.875% Senior Secured Notes due 2025 (“2025 CCH Senior Notes”)	i 1,500,000			i 1,500,000
5.125% Senior Secured Notes due 2027 (“2027 CCH Senior Notes”)	i 1,500,000			i 1,500,000
4.80% Senior Secured Notes due 2039 (“4.80% CCH Senior Notes”)	i 727,000			i —
3.925% Senior Secured Notes due 2039 (“3.925% CCH Senior Notes”)	i 475,000			i —
3.700% Senior Secured Notes due 2029 (“2029 CCH Senior Notes”)	i 1,500,000			i —
CCH Credit Facility	i 3,282,655			i 5,155,737
Unamortized debt issuance costs	( i 141,175		)	( i 160,185		)
Total long-term debt, net	i 10,093,480			i 9,245,552

Current debt
$1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”)	i —			i 168,000
Total debt, net	$	i 10,093,480		$	i 9,413,552

Below is a schedule of future principal payments that we are obligated to make, based on current construction schedules, on our outstanding debt at December 31, 2019 (in thousands):



Years Ending December 31,	Principal Payments
2020	$	i —
2021	i 134,973
2022	i 118,507
2023	i 132,859
2024	i 4,146,316
Thereafter	i 5,702,000
Total	$	i 10,234,655

Senior Notes

CCH Senior Notes

In September 2019, we issued an aggregate principal amount of $ i 727 million of the 4.80% CCH Senior Notes in a private placement conducted pursuant to Section 4(a)(2) of the Securities Act. The 4.80% CCH Senior Notes were issued under an indenture dated as of September 27, 2019 pursuant to a note purchase agreement with the purchasers party thereto and Allianz Global Investors GmbH, as noteholder consultant, originally entered into in June 2019. In October 2019, we issued an aggregate principal amount of $ i 475 million of the 3.925% CCH Senior Notes in a private placement conducted pursuant to Section 4(a)(2) of the Securities Act. The 3.925% CCH Senior Notes were issued under an indenture dated October 17, 2019 pursuant to a note purchase agreement with the purchasers party thereto and certain accounts managed by BlackRock Real Assets and certain accounts managed by MetLife Investment Management. The 4.80% CCH Senior Notes and the 3.925% CCH Senior Notes accrue interest at a fixed rate of i 4.80% and i 3.925% per annum, respectively, and are fully amortizing according to a fixed sculpted amortization schedule with semi-annual payments of interest starting December 2019 and semi-annual payments of principal starting June 2027. The 4.80% CCH Senior Notes and the 3.925% CCH Senior Notes have a weighted average life of i 15 years.

In November 2019, we issued an aggregate principal amount of $ i 1.5 billion of the 2029 CCH Senior Notes. The 2029 CCH Senior Notes were issued pursuant to the same indenture governing the 2024 CCH Senior Notes, 2025 CCH Senior Notes and 2027 CCH Senior Notes (together with the 2029 CCH Senior Notes, the "144A CCH Senior Notes"). Borrowings under the 2029 CCH Senior Notes accrue interest at a fixed rate of 3.700% per annum.

The proceeds of the 4.80% CCH Senior Notes, 3.925% CCH Senior Notes and 2029 CCH Senior Notes were used to prepay a portion of the balance outstanding under the CCH Credit Facility, resulting in the recognition of debt modification and

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

extinguishment costs of $ i 38.7 million for the year ended December 31, 2019 relating to the write off of unamortized debt discounts and issuance costs.

The 144A CCH Senior Notes, 4.80% CCH Senior Notes and 3.925% CCH Senior Notes (collectively, the “CCH Senior Notes”) are jointly and severally guaranteed by our subsidiaries, CCL, CCP and CCP GP (the “Guarantors”). The indentures governing each of the CCH Senior Notes contain customary terms and events of default and certain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: incur additional indebtedness or issue preferred stock; make certain investments or pay dividends or distributions on membership interests or subordinated indebtedness or purchase, redeem or retire membership interests; sell or transfer assets, including membership or partnership interests of our restricted subsidiaries; restrict dividends or other payments by restricted subsidiaries to us or any of our restricted subsidiaries; incur liens; enter into transactions with affiliates; dissolve, liquidate, consolidate, merge, sell or lease all or substantially all of the properties or assets of us and our restricted subsidiaries taken as a whole; or permit any Guarantor to dissolve, liquidate, consolidate, merge, sell or lease all or substantially all of its properties and assets. Interest on the CCH Senior Notes is payable semi-annually in arrears.

At any time prior to i six months before the respective dates of maturity for each of the CCH Senior Notes, we may redeem all or part of such series of the CCH Senior Notes at a redemption price equal to the “make-whole” price set forth in the appropriate indenture, plus accrued and unpaid interest, if any, to the date of redemption. At any time within i six months of the respective dates of maturity for each of the CCH Senior Notes, we may redeem all or part of such series of the CCH Senior Notes, in whole or in part, at a redemption price equal to i 100% of the principal amount of the CCH Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to the date of redemption.

Credit Facilities

Below is a summary of our credit facilities outstanding as of December 31, 2019 (in thousands):



	CCH Credit Facility		CCH Working Capital Facility
Original facility size	$	i 8,403,714	$	i 350,000
Incremental commitments	i 1,565,961		i 850,000
Less:
Outstanding balance	i 3,282,655		i —
Commitments terminated	i 6,687,020		i —
Letters of credit issued	i —		i 470,784
Available commitment	$	i —	$	i 729,216

Interest rate on available balance	LIBOR plus 1.75% or base rate plus 0.75%		LIBOR plus 1.25% - 1.75% or base rate plus 0.25% - 0.75%
Weighted average interest rate of outstanding balance	i 3.55%		n/a
Maturity date	i June 30, 2024		i June 29, 2023

CCH Credit Facility

In May 2018, we amended and restated the CCH Credit Facility to increase total commitments under the CCH Credit Facility from $ i 4.6 billion to $ i 6.1 billion. Borrowings are used to fund a portion of the costs of developing, constructing and placing into service the i three Trains and the related facilities of the Liquefaction Project and for related business purposes.

The CCH Credit Facility matures on i June 30, 2024, with principal payments due quarterly commencing on the earlier of (1) the first quarterly payment date occurring more than three calendar months following the completion of the Liquefaction Project as defined in the common terms agreement and (2) a set date determined by reference to the date under which a certain LNG buyer linked to the last Train of the Liquefaction Project to become operational is entitled to terminate its SPA for failure to achieve the date of first commercial delivery for that agreement. Scheduled repayments will be based upon a 19-year tailored amortization, commencing the first full quarter after the completion of Trains 1 through 3 and designed to achieve a minimum projected fixed debt service coverage ratio of i 1.50:1.

Loans under the CCH Credit Facility accrue interest at a variable rate per annum equal to, at our election, i LIBOR or the base rate (determined by reference to the applicable agent’s prime rate), plus the applicable margin. The applicable margin for LIBOR loans is i 1.75% and for base rate loans is i 0.75%. Interest on LIBOR loans is due and payable at the end of each applicable

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

interest period and interest on base rate loans is due and payable at the end of each quarter. The CCH Credit Facility also requires us to pay a commitment fee at a rate per annum equal to i 40% of the margin for LIBOR loans, multiplied by the outstanding undrawn debt commitments.

Our obligations under the CCH Credit Facility are secured by a first priority lien on substantially all of our assets and our subsidiaries and by a pledge by CCH HoldCo I of its limited liability company interests in us, on a pari passu basis with the CCH Senior Notes and the CCH Working Capital Facility.

Under the CCH Credit Facility, we are required to hedge not less than i 65% of the variable interest rate exposure of our senior secured debt. We are restricted from making certain distributions under agreements governing our indebtedness generally until, among other requirements, the completion of the construction of Trains 1 through 3 of the Liquefaction Project, funding of a debt service reserve account equal to i six months of debt service and achieving a historical debt service coverage ratio and fixed projected debt service coverage ratio of at least i 1.25:1.00.

The amendment and restatement of the CCH Credit Facility resulted in the recognition of $ i 15.3 million of debt modification and extinguishment costs during the year ended December 31, 2018 relating to the incurrence of third party fees and write off of unamortized debt issuance costs. We were required to pay certain upfront fees to the agents and lenders under the CCH Credit Facility together with additional transaction fees and expenses in the aggregate amount of $ i 53.3 million during the year ended December 31, 2018.

As part of the capital allocation framework announced by Cheniere in June 2019, we prepaid $ i 152.8 million of outstanding borrowings under the CCH Credit Facility during the year ended December 31, 2019. The prepayment resulted in the recognition of debt extinguishment costs of $ i 2.6 million for the year ended December 31, 2019.

CCH Working Capital Facility

In June 2018, we amended and restated the CCH Working Capital Facility to increase total commitments under the CCH Working Capital Facility from $ i 350 million to $ i 1.2 billion. The CCH Working Capital Facility is intended to be used for loans (“CCH Working Capital Loans”) and the issuance of letters of credit for certain working capital requirements related to developing and operating the Liquefaction Project and for related business purposes. Loans under the CCH Working Capital Facility are guaranteed by the Guarantors. We may, from time to time, request increases in the commitments under the CCH Working Capital Facility of up to the maximum allowed for working capital under the Common Terms Agreement that was entered into concurrently with the CCH Credit Facility.

Loans under the CCH Working Capital Facility, including CCH Working Capital Loans and loans made in connection with a draw upon any letter of credit (“CCH LC Loans” and collectively, the “Revolving Loans”) accrue interest at a variable rate per annum equal to i LIBOR or the base rate (equal to the highest of (1) the prime rate, (2) the federal funds rate plus i 0.50% and (3) one month LIBOR plus i 0.50%) plus the applicable margin. The applicable margin for LIBOR Revolving Loans ranges from i 1.25% to i 1.75% per annum, and the applicable margin for base rate Revolving Loans ranges from i 0.25% to i 0.75% per annum. Interest on Revolving Loans is due and payable on the date the loan becomes due. Interest on LIBOR Revolving Loans is due and payable at the end of each LIBOR period, and interest on base rate Revolving Loans is due and payable at the end of each quarter.

We pay (1) a commitment fee equal to an annual rate of i 40% of the applicable margin for LIBOR Revolving Loans on the average daily amount of the excess of the total commitment amount over the principal amount outstanding, (2) a letter of credit fee equal to an annual rate equal to the applicable margin for LIBOR Revolving Loans on the undrawn portion of all letters of credit issued under the CCH Working Capital Facility and (3) a letter of credit fronting fee equal to an annual rate of i 0.20% of the undrawn portion of all fronted letters of credit. Each of these fees is payable quarterly in arrears.

If draws are made upon a letter of credit issued under the CCH Working Capital Facility and we do not elect for such draw (a “CCH LC Draw”) to be deemed a CCH LC Loan, we are required to pay the full amount of the CCH LC Draw on or prior to the business day following the notice of the CCH LC Draw. A CCH LC Draw accrues interest at an annual rate of i 2.00% plus the base rate.

We were required to pay certain upfront fees to the agents and lenders under the CCH Working Capital Facility together with additional transaction fees and expenses in the aggregate amount of $ i 13.8 million during the year ended December 31, 2018.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The CCH Working Capital Facility matures on i June 29, 2023 and we may prepay the Revolving Loans at any time without premium or penalty upon three business days’ notice and may re-borrow at any time. CCH LC Loans have a term of up to i one year. We are required to reduce the aggregate outstanding principal amount of all CCH Working Capital Loans to i zero for a period of five consecutive business days at least once each year.

The CCH Working Capital Facility contains conditions precedent for extensions of credit, as well as customary affirmative and negative covenants. Our obligations under the CCH Working Capital Facility are secured by substantially all of our assets and the assets of the Guarantors as well as all of the membership interests in us and the membership interest in each of the Guarantors on a pari passu basis with the CCH Senior Notes and the CCH Credit Facility.

Restrictive Debt Covenants

As of December 31, 2019, we were in compliance with all covenants related to our debt agreements.

Interest Expense

Total interest expense consisted of the following (in thousands):



	Year Ended December 31,
	2019			2018			2017
Total interest cost	$	i 538,677		$	i 451,135		$	i 360,932
Capitalized interest, including amounts capitalized as an Allowance for Funds Used During Construction	( i 260,642		)	( i 451,135		)	( i 360,932		)
Total interest expense, net	$	i 278,035		$	i —		$	i —

Fair Value Disclosures

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

Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value

Senior notes (1)

i 5,750,000

i 6,329,200

i 4,250,000

i 4,228,750

4.80% CCH Senior Notes (2)

i 727,000

i 830,203

i —

3.925% CCH Senior Notes (2)

i 475,000

i 495,291

i —

Credit facilities (3)

i 3,282,655

i 5,323,737


(1)	Includes 144A CCH Senior Notes. 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)	Includes CCH Credit Facility and CCH Working Capital Facility. 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.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTE 11— i REVENUES FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue earned from contracts with customers during the years ended December 31, 2019, 2018 and 2017 (in thousands):

Year Ended December 31,

2019

2018

2017

LNG revenues

i 678,843

i —

LNG revenues—affiliate

i 726,100

i —

Total revenues from customers

i 1,404,943

i —

Net derivative gains (1)

i 227

i —

Total revenues

i 1,405,170

i —

(1) See Note 7—Derivative Instruments for additional information about our derivatives.

LNG Revenues

We have entered into numerous SPAs with third party customers for the sale of LNG on a free on board (“FOB”) (delivered to the customer at the Corpus Christi LNG terminal) basis. Our customers generally purchase LNG for a price consisting of a fixed fee per MMBtu of LNG (a portion of which is subject to annual adjustment for inflation) plus a variable fee per MMBtu of LNG equal to approximately i 115% of Henry Hub. The fixed fee component is the amount payable to us regardless of a cancellation or suspension of LNG cargo deliveries by the customers. The variable fee component is the amount generally payable to us only upon delivery of LNG plus all future adjustments to the fixed fee for inflation. The SPAs and contracted volumes to be made available under the SPAs are not tied to a specific Train; however, the term of each SPA generally commences upon the date of first commercial delivery of a specified Train. Additionally, we have agreements with Cheniere Marketing for which the related revenues are recorded as LNG revenues—affiliate. See Note 12—Related Party Transactions for additional information regarding these agreements.

Revenues from the sale of LNG are recognized at a point in time when the LNG is delivered to the customer, at the Corpus Christi LNG terminal, which is the point legal title, physical possession and the risks and rewards of ownership transfer to the customer. Each individual molecule of LNG is viewed as a separate performance obligation. The stated contract price (including both fixed and variable fees) per MMBtu in each LNG sales arrangement is representative of the stand-alone selling price for LNG at the time the contract was negotiated. We have concluded that the variable fees meet the exception for allocating variable consideration to specific parts of the contract. As such, the variable consideration for these contracts is allocated to each distinct molecule of LNG and recognized when that distinct molecule of LNG is delivered to the customer. Because of the use of the exception, variable consideration related to the sale of LNG is also not included in the transaction price.

Fees received pursuant to SPAs are recognized as LNG revenues only after substantial completion of the respective Train. Prior to substantial completion, sales generated during the commissioning phase are offset against the cost of construction for the respective Train, as the production and removal of LNG from storage is necessary to test the facility and bring the asset to the condition necessary for its intended use.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

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 December 31, 2019 and 2018:

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 33.6

i 11

i 33.9

i 12

LNG revenues—affiliate

i 1.0

i 13

i 1.0

i 14

Total revenues

i 34.6

i 34.9


(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 44% during the year ended December 31, 2019 of our LNG revenues were related to variable consideration received from customers. All of our LNG revenues—affiliate were related to variable consideration received from customers during the year ended December 31, 2019.

We have entered 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.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTE 12— i RELATED PARTY TRANSACTIONS

Below is a summary of our related party transactions as reported on our Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 (in thousands):

Year Ended December 31,

2019

2018

2017

LNG revenues—affiliate

Cheniere Marketing Agreements

i 719,069

i —

Contracts for Sale and Purchase of Natural Gas and LNG

i 7,031

i —

Total LNG revenues—affiliate

i 726,100

i —

Cost of sales—affiliate

Contracts for Sale and Purchase of Natural Gas and LNG

i 3,015

i —

Cost of sales—related party

Natural Gas Supply Agreement

i 85,429

i —

Operating and maintenance expense—affiliate

Services Agreements

i 58,576

i 3,412

i 2,075

Land Agreements

i 743

i 874

i 326

Other Agreements

i —

( i 3

)

i —

Total operating and maintenance expense—affiliate

i 59,319

i 4,283

i 2,401

Development expense—affiliate

Services Agreements

i 61

i —

i 8

General and administrative expense—affiliate

Services Agreements

i 11,352

i 2,201

i 1,173

We had $ i 26.9 million and $ i 25.1 million due to affiliates as of December 31, 2019 and 2018, respectively, under agreements with affiliates, as described below.

Cheniere Marketing Agreements

CCL has a fixed price SPA with Cheniere Marketing (the “Cheniere Marketing Base SPA”) with a term of i 20 years which allows Cheniere Marketing to purchase, at its option, (1) up to a cumulative total of i 150 TBtu of LNG within the commissioning periods for Trains 1 through 3 and (2) any excess LNG produced by the Liquefaction Facilities that is not committed to customers under third-party SPAs. Under the Cheniere Marketing Base SPA, Cheniere Marketing may, without charge, elect to suspend deliveries of cargoes (other than commissioning cargoes) scheduled for any month under the applicable annual delivery program by providing specified notice in advance. Additionally, CCL has: (1) a fixed price SPA with an approximate term of i 23 years with Cheniere Marketing which allows them to purchase volumes of approximately i 15 TBtu per annum of LNG and (2) an SPA for i 0.85 mtpa of LNG with a term of up to i seven years associated with the integrated production marketing gas supply agreement between CCL and EOG Resources, Inc. As of December 31, 2019 and 2018, CCL had $ i 57.2 million and $ i 21.1 million of accounts receivable—affiliate, respectively, under these agreements.

Services Agreements

Gas and Power Supply Services Agreement (“G&P Agreement”)

CCL has a G&P Agreement with Cheniere Energy Shared Services, Inc. (“Shared Services”), a wholly owned subsidiary of Cheniere, pursuant to which Shared Services will manage the gas and power procurement requirements of CCL. The services include, among other services, exercising the day-to-day management of CCL’s natural gas and power supply requirements, negotiating agreements on CCL’s behalf and providing other administrative services. Prior to the substantial completion of each Train of the Liquefaction Facilities, no monthly fee payment is required except for reimbursement of operating expenses. After substantial completion of each Train of the Liquefaction Facilities, for services performed while the Liquefaction Facilities is

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

operational, CCL will pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $ i 125,000 (indexed for inflation) for services with respect to such Train.

Operation and Maintenance Agreements (“O&M Agreements”)

CCL has an O&M Agreement (“CCL O&M Agreement”) with Cheniere LNG O&M Services, LLC (“O&M Services”), a wholly owned subsidiary of Cheniere, pursuant to which CCL receives all of the necessary services required to construct, operate and maintain the Liquefaction Facilities. The services to be provided include, among other services, preparing and maintaining staffing plans, identifying and arranging for procurement of equipment and materials, overseeing contractors, administering various agreements, information technology services and other services required to operate and maintain the Liquefaction Facilities. Prior to the substantial completion of each Train of the Liquefaction Facilities, no monthly fee payment is required except for reimbursement of operating expenses. After substantial completion of each Train of the Liquefaction Facilities, for services performed while the Liquefaction Facilities is operational, CCL will pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $ i 125,000 (indexed for inflation) for services with respect to such Train.

CCP has an O&M Agreement (“CCP O&M Agreement”) with O&M Services pursuant to which CCP receives all of the necessary services required to construct, operate and maintain the Corpus Christi Pipeline. The services to be provided include, among other services, preparing and maintaining staffing plans, identifying and arranging for procurement of equipment and materials, overseeing contractors, information technology services and other services required to operate and maintain the Corpus Christi Pipeline. CCP is required to reimburse O&M Services for all operating expenses incurred on behalf of CCP.

Management Services Agreements (“MSAs”)

CCL has a MSA with Shared Services pursuant to which Shared Services manages the construction and operation of the Liquefaction Facilities, excluding those matters provided for under the G&P Agreement and the CCL O&M Agreement. The services include, among other services, exercising the day-to-day management of CCL’s affairs and business, managing CCL’s regulatory matters, preparing status reports, providing contract administration services for all contracts associated with the Liquefaction Facilities and obtaining insurance. Prior to the substantial completion of each Train of the Liquefaction Facilities, no monthly fee payment is required except for reimbursement of expenses. After substantial completion of each Train, CCL will pay, in addition to the reimbursement of related expenses, a monthly fee equal to i 3% of the capital expenditures incurred in the previous month and a fixed monthly fee of $ i 375,000 for services with respect to such Train.

CCP has a MSA with Shared Services pursuant to which Shared Services manages CCP’s operations and business, excluding those matters provided for under the CCP O&M Agreement. The services include, among other services, exercising the day-to-day management of CCP’s affairs and business, managing CCP’s regulatory matters, preparing status reports, providing contract administration services for all contracts associated with the Corpus Christi Pipeline and obtaining insurance. CCP is required to reimburse Shared Services for the aggregate of all costs and expenses incurred in the course of performing the services under the MSA.

Natural Gas Supply Agreement

CCL has entered into a natural gas supply contract to obtain feed gas for the operation of the Liquefaction Project through March 2022 with a related party in the ordinary course of business. CCL recorded $ i 85.4 million in cost of sales—related party under this contract during the year ended December 31, 2019. Of this amount, $ i 2.5 million and i zero was included in accrued liabilities—related party as of December 31, 2019 and 2018, respectively. CCL did i not have any deliveries during the year ended December 31, 2018 under this contract. CCL also has recorded derivative assets—related party of $ i 2.6 million and $ i 2.1 million and non-current derivative assets—related party of $ i 1.9 million and $ i 3.4 million as of December 31, 2019 and 2018, respectively, related to this contract.

Agreements with Midship Pipeline

CCL has entered into a transportation precedent agreement and a negotiated rate agreement with Midship Pipeline Company, LLC (“Midship Pipeline”) to secure firm pipeline transportation capacity for a period of i 10 years following commencement of the approximately i 200-mile natural gas pipeline project which Midship Pipeline is constructing. In May 2018, CCL issued a letter of credit to Midship Pipeline for drawings up to an aggregate maximum amount of $ i 16.2 million. Midship Pipeline had i not made any drawings on this letter of credit as of December 31, 2019.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Natural Gas Transportation Agreement

Cheniere Corpus Christi Liquefaction Stage III, LLC, a wholly owned subsidiary of Cheniere, has a transportation precedent agreement with CCP to secure firm pipeline transportation capacity for the transportation of natural gas feedstock to the expansion of the Corpus Christi LNG terminal it is constructing adjacent to the Liquefaction Project. The agreement will have a primary term of i 20 years from the service commencement date with right to extend the term for i two successive five-year terms.

Contracts for Sale and Purchase of Natural Gas and LNG

CCL has an agreement with Sabine Pass Liquefaction, LLC that allows them to sell and purchase natural gas with each other. Natural gas purchased under this agreement 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 this agreement is recorded as LNG revenues—affiliate.

CCL also has an agreement with Midship Pipeline that allows them to sell and purchase natural gas with each other. CCL did i not have any transactions under this agreement during the year ended December 31, 2019.

Land Agreements

Lease Agreements

CCL has agreements with Cheniere Land Holdings, LLC (“Cheniere Land Holdings”), a wholly owned subsidiary of Cheniere, to lease the land owned by Cheniere Land Holdings for the Liquefaction Facilities. The total annual lease payment is $ i 0.6 million, and the terms of the agreements range from three to i five years.

Easement Agreements

CCL has agreements with Cheniere Land Holdings which grant CCL easements on land owned by Cheniere Land Holdings for the Liquefaction Facilities. The total annual payment for easement agreements is $ i 0.1 million, excluding any previously paid one-time payments, and the terms of the agreements range from three to i five years.

Dredge Material Disposal Agreement

CCL has a dredge material disposal agreement with Cheniere Land Holdings that terminates in 2042 which grants CCL permission to use land owned by Cheniere Land Holdings for the deposit of dredge material from the construction and maintenance of the Liquefaction Facilities. Under the terms of the agreement, CCL will pay Cheniere Land Holdings $ i 0.50 per cubic yard of dredge material deposits up to i 5.0 million cubic yards and $ i 4.62 per cubic yard for any quantities above that.

Tug Hosting Agreement

In February 2017, CCL entered into a tug hosting agreement with Corpus Christi Tug Services, LLC (“Tug Services”), a wholly owned subsidiary of Cheniere, to provide certain marine structures, support services and access necessary at the Liquefaction Facilities for Tug Services to provide its customers with tug boat and marine services. Tug Services is required to reimburse CCL for any third party costs incurred by CCL in connection with providing the goods and services.

State Tax Sharing Agreements

CCL has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which CCL 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, CCL will pay to Cheniere an amount equal to the state and local tax that CCL would be required to pay if CCL’s 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 CCL under this agreement; therefore, Cheniere has not demanded any such payments from CCL. The agreement is effective for tax returns due on or after May 2015.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

CCP has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which CCP 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, CCP will pay to Cheniere an amount equal to the state and local tax that CCP would be required to pay if CCP’s 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 CCP under this agreement; therefore, Cheniere has not demanded any such payments from CCP. The agreement is effective for tax returns due on or after May 2015.

Equity Contribution Agreements

Equity Contribution Agreement

In May 2018, we amended and restated the existing equity contribution agreement with Cheniere (the “Equity Contribution Agreement”) pursuant to which Cheniere agreed to provide cash contributions up to approximately $ i 1.1 billion, not including $ i 2.0 billion previously contributed under the original equity contribution agreement. As of December 31, 2019, we have received $ i 557.9 million in contributions under the Equity Contribution Agreement and Cheniere has posted $ i 585.0 million of letters of credit on our behalf. Cheniere is only required to make additional contributions under the Equity Contribution Agreement after the commitments under the CCH Credit Facility have been reduced to i zero and to the extent cash flows from operations of the Liquefaction Project are unavailable for Liquefaction Project costs.

Early Works Equity Contribution Agreement

In conjunction with the amendment and restatement of the Equity Contribution Agreement, we terminated the early works equity contribution agreement with Cheniere entered into in December 2017. Prior to termination in May 2018, we had received $ i 250.0 million in contributions from Cheniere under the early works equity contribution agreement.

NOTE 13— i COMMITMENTS AND CONTINGENCIES

We have various contractual obligations which are recorded as liabilities in our Consolidated Financial Statements. Other items, such as certain purchase commitments and other executed contracts which do not meet the definition of a liability as of December 31, 2019, are not recognized as liabilities but require disclosures in our Consolidated Financial Statements.

LNG Terminal Commitments and Contingencies

Obligations under EPC Contracts

CCL has a lump sum turnkey contract with Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) for the engineering, procurement and construction of Train 3 of the Liquefaction Project. The EPC contract price for Train 3 of the Liquefaction Project is approximately $ i 2.4 billion, reflecting amounts incurred under change orders through December 31, 2019. As of December 31, 2019, we have incurred $ i 2.0 billion under this contract. CCL has the right to terminate each of the EPC contracts for its convenience, in which case Bechtel will be paid (1) the portion of the contract price for the work performed, (2) costs reasonably incurred by Bechtel on account of such termination and demobilization and (3) a lump sum of up to $ i 30 million depending on the termination date.

Obligations under SPAs

CCL has third-party SPAs which obligate CCL to purchase and liquefy sufficient quantities of natural gas to deliver contracted volumes of LNG to the customers’ vessels, subject to completion of construction of specified Trains of the Liquefaction Project. CCL has also entered into SPAs with Cheniere Marketing, as further described in Note 12—Related Party Transactions.

Obligations under Natural Gas Supply, Transportation and Storage Service Agreements

CCL has physical natural gas supply contracts to secure natural gas feedstock for the Liquefaction Project. The remaining terms of these contracts range up to i 8 years, some of which commence upon the satisfaction of certain events or states of affairs. As of December 31, 2019, CCL had secured up to approximately i 2,999 TBtu of natural gas feedstock through natural gas supply contracts, a portion of which are considered purchase obligations if the certain events or states of affairs are satisfied.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Additionally, CCL has natural gas transportation and storage service agreements for the Liquefaction Project. The initial terms of the natural gas transportation agreements range up i 20 years, with renewal options for certain contracts, and commences upon the occurrence of conditions precedent. The initial term of the natural gas storage service agreements ranges up to i five years.

As of December 31, 2019, CCL’s obligations under natural gas supply, transportation and storage service agreements for contracts in which conditions precedent were met were as follows (in thousands):



Years Ending December 31,	Payments Due (1)
2020	$	i 1,255,512
2021	i 1,047,335
2022	i 711,428
2023	i 591,844
2024	i 483,856
Thereafter	i 2,072,188
Total	$	i 6,162,163


(1)	Pricing of natural gas supply contracts are variable based on market commodity basis prices adjusted for basis spread. Amounts included are based on estimated forward prices and basis spreads as of December 31, 2019. Some of our contracts may not have been negotiated as part of arranging financing for the underlying assets providing the natural gas supply, transportation and storage services.

Services Agreements

CCL and CCP have certain services agreements with affiliates. See Note 12—Related Party Transactions for information regarding such agreements.

State Tax Sharing Agreement

CCL and CCP have a state tax sharing agreement with Cheniere. See Note 12—Related Party Transactions for information regarding this agreement.

Other Commitments

In the ordinary course of business, we have entered into certain multi-year licensing and service agreements, none of which are considered material to our financial position.

Environmental and Regulatory Matters

The Liquefaction Project is subject to extensive regulation under federal, state and local statutes, rules, regulations and laws. These laws require that we engage in consultations with appropriate federal and state agencies and that we obtain and maintain applicable permits and other authorizations. Failure to comply with such laws could result in legal proceedings, which may include substantial penalties. We believe that, based on currently known information, compliance with these laws and regulations will not have a material adverse effect on our results of operations, financial condition or cash flows.

Legal Proceedings

We may in the future be involved as a party to various legal proceedings, which are incidental to the ordinary course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual disposition of these matters. In the opinion of management, as of December 31, 2019, there were i no pending legal matters that would reasonably be expected to have a material impact on our operating results, financial position or cash flows.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTE 14— i CUSTOMER CONCENTRATION

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



	Percentage of Total Revenues from External Customers			Percentage of Accounts Receivable from External Customers
	Year Ended December 31,			December 31,
	2019	2018	2017	2019	2018
Customer A	i 57%	i —%	i —%	i 38%	i —%
Customer B	i 23%	i —%	i —%	i 39%	i —%

/ i

The following table shows revenues from external customers attributable to the country in which the revenues were derived (in thousands). We attribute revenues from external customers to the country in which the party to the applicable agreement has its principal place of business. Substantially all of our long-lived assets are located in the United States.



	Revenues from External Customers
	Year Ended December 31,
	2019		2018		2017
Spain	$	i 451,199	$	i —	$	i —
Indonesia	i 154,584		i —		i —
United States	i 73,287		i —		i —
Total	$	i 679,070	$	i —	$	i —

NOTE 15— i SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental disclosure of cash flow information (in thousands):



	Year Ended December 31,
	2019		2018		2017
Cash paid during the period for interest, net of amounts capitalized	$	i 258,491	$	i 104,811	$	i —
Non-cash capital contribution for conveyance of property, plant and equipment from affiliate	i —		i 83,058		i —

The balance in property, plant and equipment, net funded with accounts payable and accrued liabilities (including affiliate) was $ i 186.7 million, $ i 178.3 million and $ i 274.3 million as of December 31, 2019, 2018 and 2017, respectively.

NOTE 16— i SUPPLEMENTAL GUARANTOR INFORMATION

Our CCH Senior Notes are jointly and severally guaranteed by our subsidiaries, CCL, CCP and CCP GP (each a “Guarantor” and collectively, the “Guarantors”). These guarantees are full and unconditional, subject to certain customary release provisions including (1) the sale, exchange, disposition or transfer (by merger, consolidation or otherwise) of the capital stock or all or substantially all of the assets of the Guarantors, (2) the designation of the Guarantor as an “unrestricted subsidiary” in accordance with the indentures governing each of the CCH Senior Notes (the “CCH Indentures”), (3) upon the legal defeasance or covenant defeasance or discharge of obligations under the CCH Indentures and (4) the release and discharge of the Guarantors pursuant to the Common Security and Account Agreement. See Note 10—Debt for additional information regarding the CCH Senior Notes.

The following is condensed consolidating financial information for CCH (“Parent Issuer”) and the Guarantors. We did not have any non-guarantor subsidiaries as of December 31, 2019.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Condensed Consolidating Balance Sheet

(in thousands)

Parent Issuer

Guarantors

Eliminations

Consolidated

ASSETS

Current assets

Cash and cash equivalents

i —

Restricted cash

i 68,787

i 10,954

i —

i 79,741

Accounts and other receivables

i —

i 57,712

i —

i 57,712

Accounts receivable—affiliate

i —

i 57,211

i —

i 57,211

Advances to affiliate

i —

i 115,476

i —

i 115,476

Inventory

i —

i 69,179

i —

i 69,179

Derivative assets

i —

i 73,809

i —

i 73,809

Derivative assets—related party

i —

i 2,623

i —

i 2,623

Other current assets

i 249

i 14,603

i —

i 14,852

Other current assets—affiliate

i —

i 5

i —

i 5

Total current assets

i 69,036

i 401,572

i —

i 470,608

Property, plant and equipment, net

i 1,330,748

i 11,176,671

i —

i 12,507,419

Debt issuance and deferred financing costs, net

i 14,705

i —

i 14,705

Non-current derivative assets

i —

i 61,217

i —

i 61,217

Non-current derivative assets—related party

i —

i 1,933

i —

i 1,933

Investments in subsidiaries

i 11,224,400

i —

( i 11,224,400

)

i —

Other non-current assets, net

i —

i 55,630

i —

i 55,630

Total assets

i 12,638,889

i 11,697,023

( i 11,224,400

)

i 13,111,512

LIABILITIES AND MEMBER’S EQUITY

Current liabilities

Accounts payable

i 32

i 7,258

i —

i 7,290

Accrued liabilities

i 9,488

i 360,492

i —

i 369,980

Accrued liabilities—related party

i —

i 2,531

i —

i 2,531

Due to affiliates

i 337

i 26,563

i —

i 26,900

Derivative liabilities

i 39,566

i 6,920

i —

i 46,486

Other current liabilities

i —

i 364

i —

i 364

Other current liabilities—affiliate

i —

i 519

i —

i 519

Total current liabilities

i 49,423

i 404,647

i —

i 454,070

Long-term debt, net

i 10,093,480

i —

i 10,093,480

Non-current derivative liabilities

i 48,661

i 86,006

i —

i 134,667

Other non-current liabilities

i —

i 10,433

—

i 10,433

Other non-current liabilities—affiliate

i —

i 1,284

i —

i 1,284

Member’s equity

i 2,447,325

i 11,194,653

( i 11,224,400

)

i 2,417,578

Total liabilities and member’s equity

i 12,638,889

i 11,697,023

( i 11,224,400

)

i 13,111,512

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Condensed Consolidating Balance Sheet

(in thousands)

Parent Issuer

Guarantors

Eliminations

Consolidated

ASSETS

Current assets

Cash and cash equivalents

i —

Restricted cash

i 282,248

i 6,893

i —

i 289,141

Accounts and other receivables

i —

i 24,989

i —

i 24,989

Accounts receivable—affiliate

i —

i 21,060

i —

i 21,060

Advances to affiliate

i —

i 94,397

i —

i 94,397

Inventory

i —

i 26,198

i —

i 26,198

Derivative assets

i 10,556

i 5,071

i —

i 15,627

Derivative assets—related party

i —

i 2,132

i —

i 2,132

Other current assets

i 178

i 15,039

i —

i 15,217

Other current assets—affiliate

i —

i 634

( i 1

)

i 633

Total current assets

i 292,982

i 196,413

( i 1

)

i 489,394

Property, plant and equipment, net

i 1,094,671

i 10,044,154

i —

i 11,138,825

Debt issuance and deferred financing costs, net

i 38,012

i —

i 38,012

Non-current derivative assets

i 7,917

i 11,115

i —

i 19,032

Non-current derivative assets—related party

i —

i 3,381

i —

i 3,381

Investments in subsidiaries

i 10,194,296

i —

( i 10,194,296

)

i —

Other non-current assets, net

i 1

i 31,708

i —

i 31,709

Total assets

i 11,627,879

i 10,286,771

( i 10,194,297

)

i 11,720,353

LIABILITIES AND MEMBER’S EQUITY

Current liabilities

Accounts payable

i 71

i 16,131

i —

i 16,202

Accrued liabilities

i 1,242

i 160,963

i —

i 162,205

Current debt

i 168,000

i —

i 168,000

Due to affiliates

i —

i 25,086

i —

i 25,086

Derivative liabilities

i 6

i 13,570

i —

i 13,576

Total current liabilities

i 169,319

i 215,750

i —

i 385,069

Long-term debt, net

i 9,245,552

i —

i 9,245,552

Non-current derivative liabilities

i 398

i 8,197

i —

i 8,595

Member’s equity

i 2,212,610

i 10,062,824

( i 10,194,297

)

i 2,081,137

Total liabilities and member’s equity

i 11,627,879

i 10,286,771

( i 10,194,297

)

i 11,720,353

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Condensed Consolidating Statement of Operations

Year Ended December 31, 2019

(in thousands)

Parent Issuer

Guarantors

Eliminations

Consolidated

Revenues

LNG revenues

i —

i 679,070

i —

i 679,070

LNG revenues—affiliate

i —

i 726,100

i —

i 726,100

Total revenues

i —

i 1,405,170

i —

i 1,405,170

Operating costs and expenses

Cost of sales (excluding depreciation and amortization expense shown separately below)

i —

i 691,301

i —

i 691,301

Cost of sales—affiliate

i —

i 3,015

i —

i 3,015

Cost of sales—related party

i —

i 85,429

i —

i 85,429

Operating and maintenance expense

i —

i 242,027

i —

i 242,027

Operating and maintenance expense—affiliate

i —

i 59,319

i —

i 59,319

Development expense

i —

i 596

i —

i 596

Development expense—affiliate

i —

i 61

i —

i 61

General and administrative expense

i 2,082

i 4,024

i —

i 6,106

General and administrative expense—affiliate

i —

i 11,352

i —

i 11,352

Depreciation and amortization expense

i 24,297

i 206,483

i —

i 230,780

Impairment expense and loss on disposal of assets

i —

i 364

i —

i 364

Total operating costs and expenses

i 26,379

i 1,303,971

i —

i 1,330,350

Income (loss) from operations

( i 26,379

)

i 101,199

i —

i 74,820

Other income (expense)

Interest expense, net of capitalized interest

( i 278,035

)

i —

( i 278,035

)

Loss on modification or extinguishment of debt

( i 41,296

)

i —

( i 41,296

)

Derivative loss, net

( i 133,427

)

i —

( i 133,427

)

Other income

i 3,387

i 528

( i 273

)

i 3,642

Total other income (expense)

( i 449,371

)

i 528

( i 273

)

( i 449,116

)

Net income (loss)

( i 475,750

)

i 101,727

( i 273

)

( i 374,296

)

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Condensed Consolidating Statement of Operations

Year Ended December 31, 2018

(in thousands)

Parent Issuer

Guarantors

Eliminations

Consolidated

Revenues

i —

Operating costs and expenses (recoveries)

Cost of sales (excluding depreciation and amortization expense shown separately below)

i —

i 172

i —

i 172

Operating and maintenance recovery

i —

( i 96

)

i —

( i 96

)

Operating and maintenance expense—affiliate

i —

i 4,283

i —

i 4,283

Development expense

i —

i 177

i —

i 177

General and administrative expense

i 1,513

i 3,750

i —

i 5,263

General and administrative expense—affiliate

i —

i 2,201

i —

i 2,201

Depreciation and amortization expense

i 239

i 9,620

i —

i 9,859

Impairment expense and gain on disposal of assets

i —

i 20

i —

i 20

Total operating costs and expenses

i 1,752

i 20,127

i —

i 21,879

Loss from operations

( i 1,752

)

( i 20,127

)

i —

( i 21,879

)

Other income (expense)

Loss on modification or extinguishment of debt

( i 15,332

)

i —

( i 15,332

)

Derivative gain, net

i 43,105

i —

i 43,105

Other income

i 352

i 7,952

( i 7,912

)

i 392

Total other income

i 28,125

i 7,952

( i 7,912

)

i 28,165

Net income (loss)

i 26,373

( i 12,175

)

( i 7,912

)

i 6,286

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Condensed Consolidating Statement of Operations

Year Ended December 31, 2017

(in thousands)

Parent Issuer

Guarantors

Eliminations

Consolidated

Revenues

i —

Operating costs and expenses

Cost of sales (excluding depreciation and amortization expense shown separately below)

i —

i 91

i —

i 91

Operating and maintenance expense

i —

i 3,024

i —

i 3,024

Operating and maintenance expense—affiliate

i —

i 2,401

i —

i 2,401

Development expense

i —

i 516

i —

i 516

Development expense—affiliate

i —

i 8

i —

i 8

General and administrative expense

i 1,360

i 4,191

i —

i 5,551

General and administrative expense—affiliate

i —

i 1,173

i —

i 1,173

Depreciation and amortization expense

i 13

i 879

i —

i 892

Impairment expense and gain on disposal of assets

i —

i 5,505

i —

i 5,505

Total operating costs and expenses

i 1,373

i 17,788

i —

i 19,161

Loss from operations

( i 1,373

)

( i 17,788

)

i —

( i 19,161

)

Other income (expense)

Loss on modification or extinguishment of debt

( i 32,480

)

i —

( i 32,480

)

Derivative gain, net

i 3,249

i —

i 3,249

Other income (expense)

( i 265

)

i 15,580

( i 15,575

)

( i 260

)

Total other income (expense)

( i 29,496

)

i 15,580

( i 15,575

)

( i 29,491

)

Net loss

( i 30,869

)

( i 2,208

)

( i 15,575

)

( i 48,652

)

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2019

(in thousands)

Parent Issuer

Guarantors

Eliminations

Consolidated

Cash flows provided by (used in) operating activities

( i 237,471

)

i 250,856

( i 46,758

)

( i 33,373

)

Cash flows from investing activities

Property, plant and equipment, net

( i 242,322

)

( i 1,274,840

)

i —

( i 1,517,162

)

Investments in subsidiaries

( i 2,711,350

)

i —

i 2,711,350

i —

Distributions received from affiliates

i 1,634,489

i —

( i 1,634,489

)

i —

Other

i —

( i 2,058

)

i —

( i 2,058

)

Net cash used in investing activities

( i 1,319,183

)

( i 1,276,898

)

i 1,076,861

( i 1,519,220

)

Cash flows from financing activities

Proceeds from issuances of debt

i 4,203,550

i —

i 4,203,550

Repayments of debt

( i 3,543,757

)

i —

( i 3,543,757

)

Debt issuance and deferred financing costs

( i 16,210

)

i —

( i 16,210

)

Debt extinguishment cost

( i 11,127

)

i —

( i 11,127

)

Capital contributions

i 710,737

i 2,711,350

( i 2,711,350

)

i 710,737

Distributions

i —

( i 1,681,247

)

i 1,681,247

i —

Net cash provided by financing activities

i 1,343,193

i 1,030,103

( i 1,030,103

)

i 1,343,193

Net increase (decrease) in cash, cash equivalents and restricted cash

( i 213,461

)

i 4,061

i —

( i 209,400

)

Cash, cash equivalents and restricted cash—beginning of period

i 282,248

i 6,893

i —

i 289,141

Cash, cash equivalents and restricted cash—end of period

i 68,787

i 10,954

i —

i 79,741

Balances per Condensed Consolidating Balance Sheet:

Parent Issuer

Guarantors

Eliminations

Consolidated

Cash and cash equivalents

i —

Restricted cash

i 68,787

i 10,954

i —

i 79,741

Total cash, cash equivalents and restricted cash

i 68,787

i 10,954

i —

i 79,741

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2018

(in thousands)

Parent Issuer

Guarantors

Eliminations

Consolidated

Cash flows used in operating activities

( i 6,854

)

( i 51,913

)

( i 1,395

)

( i 60,162

)

Cash flows from investing activities

Property, plant and equipment, net

( i 555,946

)

( i 2,406,990

)

i —

( i 2,962,936

)

Investments in subsidiaries

( i 2,532,266

)

i —

i 2,532,266

i —

Distributions received from affiliates

i 67,744

i —

( i 67,744

)

i —

Other

i —

i 2,669

i —

i 2,669

Net cash used in investing activities

( i 3,020,468

)

( i 2,404,321

)

i 2,464,522

( i 2,960,267

)

Cash flows from financing activities

Proceeds from issuances of debt

i 3,114,800

i —

i 3,114,800

Repayments of debt

( i 301,455

)

i —

( i 301,455

)

Debt issuance and deferred financing costs

( i 45,743

)

i —

( i 45,743

)

Debt extinguishment cost

( i 9,108

)

i —

( i 9,108

)

Capital contributions

i 324,517

i 2,532,266

( i 2,532,266

)

i 324,517

Distributions

i —

( i 69,139

)

i 69,139

i —

Net cash provided by financing activities

i 3,083,011

i 2,463,127

( i 2,463,127

)

i 3,083,011

Net increase in cash, cash equivalents and restricted cash

i 55,689

i 6,893

i —

i 62,582

Cash, cash equivalents and restricted cash—beginning of period

i 226,559

i —

i 226,559

Cash, cash equivalents and restricted cash—end of period

i 282,248

i 6,893

i —

i 289,141

Balances per Condensed Consolidating Balance Sheet:

Parent Issuer

Guarantors

Eliminations

Consolidated

Cash and cash equivalents

i —

Restricted cash

i 282,248

i 6,893

i —

i 289,141

Total cash, cash equivalents and restricted cash

i 282,248

i 6,893

i —

i 289,141

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2017

(in thousands)

Parent Issuer

Guarantors

Eliminations

Consolidated

Cash flows used in operating activities

( i 52,633

)

( i 11,683

)

i —

( i 64,316

)

Cash flows from investing activities

Property, plant and equipment, net

( i 253,612

)

( i 1,733,642

)

i —

( i 1,987,254

)

Investments in subsidiaries

( i 1,720,280

)

i —

i 1,720,280

i —

Other

i —

i 25,045

i —

i 25,045

Net cash used in investing activities

( i 1,973,892

)

( i 1,708,597

)

i 1,720,280

( i 1,962,209

)

Cash flows from financing activities

Proceeds from issuances of debt

i 3,040,000

i —

i 3,040,000

Repayments of debt

( i 1,436,050

)

i —

( i 1,436,050

)

Debt issuance and deferred financing costs

( i 23,496

)

i —

( i 23,496

)

Debt extinguishment cost

( i 29

)

i —

( i 29

)

Capital contributions

i 402,119

i 1,720,437

( i 1,720,437

)

i 402,119

Distributions

i —

( i 157

)

i 157

i —

Net cash provided by financing activities

i 1,982,544

i 1,720,280

( i 1,720,280

)

i 1,982,544

Net decrease in cash, cash equivalents and restricted cash

( i 43,981

)

i —

( i 43,981

)

Cash, cash equivalents and restricted cash—beginning of period

i 270,540

i —

i 270,540

Cash, cash equivalents and restricted cash—end of period

i 226,559

i —

i 226,559

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARIZED QUARTERLY FINANCIAL DATA

(unaudited)

i i

Summarized Quarterly Financial Data—(in thousands)

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

Year ended December 31, 2019:

Revenues

i 106,081

i 300,073

i 386,559

i 612,457

Income (loss) from operations

( i 25,402

)

( i 43,388

)

( i 90,951

)

i 234,561

Net income (loss)

( i 71,277

)

( i 188,907

)

( i 272,410

)

i 158,298

Year ended December 31, 2018:

Revenues

i —

Income (loss) from operations

( i 3,090

)

( i 5,941

)

i 2,345

( i 15,193

)

Net income (loss)

i 65,692

i 7,319

i 24,388

( i 91,113

)

/ /


ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


ITEM 9A.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on their evaluation as of the end of the fiscal year ended December 31, 2019, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are (1) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and (2) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

During the most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our Management’s Report on Internal Control Over Financial Reporting is included in our Consolidated Financial Statements on page 39 and is incorporated herein by reference.


ITEM 9B.	OTHER INFORMATION

None.

PART III


ITEM 10.	MANAGERS, EXECUTIVE OFFICERS AND COMPANY GOVERNANCE

Omitted pursuant to Instruction I of Form 10-K.


ITEM 11.	EXECUTIVE COMPENSATION

Omitted pursuant to Instruction I of Form 10-K.


ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED MEMBER MATTERS

Omitted pursuant to Instruction I of Form 10-K.


ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND MANAGER INDEPENDENCE

Omitted pursuant to Instruction I of Form 10-K.


ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

KPMG LLP served as our independent auditor for the fiscal years ended December 31, 2019 and 2018. The following table sets forth the fees paid to KPMG LLP for professional services rendered for 2019 and 2018 (in thousands):



	Fiscal 2019		Fiscal 2018
Audit Fees	$	1,625	$	950
Tax Fees	—		128
Total	$	1,625	$	1,078

Audit Fees—Audit fees for 2019 and 2018 include fees associated with the audit of our annual Consolidated Financial Statements, reviews of our interim Consolidated Financial Statements and services performed in connection with registration statements and debt offerings, including comfort letters and consents.

Audit-Related Fees—There were no audit-related fees in 2019 and 2018.

Tax Fees—Tax fees for 2018 was for tax consultation services with respect to a sales and use tax analysis for the Liquefaction Project. There were no tax fees in 2019.

Other Fees—There were no other fees in 2019 and 2018.

Auditor Pre-Approval Policy and Procedures

We are not a public company and we are not listed on any stock exchange. As a result, we are not required to, and do not, have an independent audit committee, a financial expert or a majority of independent directors. The audit committee of Cheniere has approved all audit and non-audit services to be provided by the independent accountants and the fees for such services during the fiscal years ended December 31, 2019 and 2018.

PART IV


ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a)	Financial Statements and Exhibits


(1)	Financial Statements—Cheniere Corpus Christi Holdings, LLC:



Management’s Report to the Member of Cheniere Corpus Christi Holdings, LLC	39
Report of Independent Registered Public Accounting Firm	40
Consolidated Balance Sheets	41
Consolidated Statements of Operations	42
Consolidated Statements of Member’s Equity	43
Consolidated Statements of Cash Flows	44
Notes to Consolidated Financial Statements	45
Supplemental Information to Consolidated Financial Statements—Quarterly Financial Data	75


(2)	Financial Statement Schedules:

All financial statement schedules have been omitted because they are not required, are not applicable, or the required information has been included elsewhere within this Form 10-K.


(3)	Exhibits:

Certain of the agreements filed as exhibits to this Form 10-K contain representations, warranties, covenants and conditions by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These representations, warranties, covenants and conditions:


•	should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;


•	may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures are not necessarily reflected in the agreements;


•	may apply standards of materiality that differ from those of a reasonable investor; and


•	were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. These agreements are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. Investors should not rely on them as statements of fact.



Exhibit No.		Incorporated by Reference (1)
Exhibit No.	Description	Entity	Form	Exhibit	Filing Date
3.1	Certificate of Formation of the Company	CCH	S-4	3.1	1/5/2017
3.2	Certificate of Correction to Certificate of Formation of the Company	CCH	S-4	3.2	1/5/2017
3.3	Amended and Restated Limited Liability Company Agreement of the Company	CCH	S-4	3.3	1/5/2017
3.4	Certificate of Formation of CCL	CCH	S-4	3.4	1/5/2017
3.5	Amended and Restated Limited Liability Company Agreement of CCL	CCH	S-4	3.5	1/5/2017
3.6	Certificate of Formation of CCP GP	CCH	S-4	3.6	1/5/2017
3.7	Certificate of Correction to Certificate of Formation of CCP GP	CCH	S-4	3.7	1/5/2017



Exhibit No.		Incorporated by Reference (1)
Exhibit No.	Description	Entity	Form	Exhibit	Filing Date
3.8	Amended and Restated Limited Liability Company Agreement of CCP GP	CCH	S-4	3.8	1/5/2017
3.9	Certificate of Limited Partnership of CCP	CCH	S-4	3.9	1/5/2017
3.10	Certificate of Amendment to Certificate of Limited Partnership of CCP	CCH	S-4	3.10	1/5/2017
3.11	Amended and Restated Agreement of Limited Partnership of CCP	CCH	S-4	3.11	1/5/2017
4.1	Indenture, dated as of May 18, 2016, among the Company, as Issuer, CCL, CCP and CCP GP, as Guarantors, and The Bank of New York Mellon, as Trustee	Cheniere	8-K	4.1	5/18/2016
4.2	Form of 7.000% Senior Secured Note due 2024 (Included as Exhibit A-1 to Exhibit 4.1 above)	Cheniere	8-K	4.1	5/18/2016
4.3	First Supplemental Indenture, dated as of December 9, 2016, among the Company, as Issuer, CCL, CCP and CCP GP, as Guarantors, and The Bank of New York Mellon, as Trustee	Cheniere	8-K	4.1	12/9/2016
4.4	Form of 5.875% Senior Secured Note due 2025 (Included as Exhibit A-1 to Exhibit 4.3 above)	Cheniere	8-K	4.1	12/9/2016
4.5	Second Supplemental Indenture, dated as of May 19, 2017, among the Company, as issuer, CCL, CCP and CCP GP, as Guarantors, and The Bank of New York Mellon, as trustee	CCH	8-K	4.1	5/19/2017
4.6	Form of 5.125% Senior Secured Note due 2027 (Included as Exhibit A-1 to Exhibit 4.5 above)	CCH	8-K	4.1	5/19/2017
4.7	Third Supplemental Indenture, dated September 6, 2019, among the Company, as issuer, CCL, CCP and CCP GP, as guarantors, and The Bank of New York Mellon, as trustee	CCH	8-K	4.1	9/12/2019
4.8	Indenture, dated as of September 27, 2019, among the Company, as issuer, and CCL, CCP and CCP GP, as guarantors, and the Bank of New York Mellon, as trustee	CCH	8-K	4.1	9/30/2019
4.9	Indenture, dated as of October 17, 2019, among the Company, as issuer, and CCL, CCP and CCP GP, as guarantors, and The Bank of New York Mellon, as trustee	CCH	8-K	4.1	10/18/2019
4.10	Fourth Supplemental Indenture, dated as of November 13, 2019, among the Company, as issuer, CCL, CCP and CCP GP, as guarantors, and The Bank of New York Mellon, as trustee	CCH	8-K	4.1	11/13/2019
10.1	Amended and Restated Term Loan Facility Agreement, dated May 22, 2018, among the Company, CCP, CCP GP, CCL, the lenders party thereto from time to time and Société Générale as the Term Loan Facility Agent	CCH	8-K	10.1	5/24/2018
10.2	Amended and Restated Common Terms Agreement, dated May 22, 2018, among the Company, CCP, CCP GP, CCL, Société Générale as Term Loan Facility Agent, The Bank of Nova Scotia as Working Capital Facility Agent, and Société Générale as Intercreditor Agent, and any other facility lenders party thereto from time to time	CCH	8-K	10.2	5/24/2018
10.3	First Amendment to the Amended and Restated Common Terms Agreement, dated as of November 28, 2018, by and among the Company, CCL, CCP and CCP GP, Société Générale as Term Loan Facility Agent, The Bank of Nova Scotia as Working Capital Facility Agent, each other Facility Agent on behalf of its respective Facility Lenders, and Société Générale as Intercreditor Agent	CCH	10-K	10.3	2/26/2019
10.4	Second Amendment to the Amended and Restated Common Terms Agreement, dated as of August 30, 2019, by and among the Company, CCL, CCP and CCP GP, Société Générale as Term Loan Facility Agent, The Bank of Nova Scotia as Working Capital Facility Agent, each other Facility Agent on behalf of its respective Facility Lenders, and Société Générale as the Intercreditor Agent	CCH	10-Q	10.2	11/1/2019



Exhibit No.		Incorporated by Reference (1)
Exhibit No.	Description	Entity	Form	Exhibit	Filing Date
10.5	Amended and Restated Common Security and Account Agreement, dated May 22, 2018, among the Company, CCP, CCP GP, CCL, the Senior Creditor Group Representatives, Société Générale as the Intercreditor Agent, Société Générale as Security Trustee and Mizuho Bank, Ltd as the Account Bank	CCH	8-K	10.3	5/24/2018
10.6	First Amendment to the Amended and Restated Common Security and Account Agreement, dated as of November 28, 2018, by and among the Company, CCL, CCP and CCP GP, the Senior Creditor Group Representatives, Société Générale as Intercreditor Agent for the Facility Lenders and any Hedging Banks, Société Générale as Security Trustee, and Mizuho Bank, Ltd. as Account Bank	CCH	10-K	10.5	2/26/2019
10.7	Second Amendment to Common Security and Account Agreement, dated as of August 30, 2019, by and among the Company, CCL, CCP, CCP GP, the Senior Creditor Group Representatives, Société Générale as Intercreditor Agent for the Facility Lenders and any Hedging Banks, Société Générale as Security Trustee, and Mizuho Bank, Ltd; as Account Bank	CCH	10-Q	10.3	11/1/2019
10.8	Amended and Restated Pledge Agreement, dated May 22, 2018, among CCH HoldCo I and Société Générale as Security Trustee	CCH	8-K	10.4	5/24/2018
10.9	Amended and Restated Equity Contribution Agreement, dated May 22, 2018, among the Company and Cheniere	CCH	8-K	10.5	5/24/2018
10.10	Amended and Restated Working Capital Facility Agreement, dated June 29, 2018, among the Company, CCP, CCP GP, CCL, the lenders party thereto from time to time, the issuing banks party thereto from time to time, the Bank of Nova Scotia as Working Capital Facility Agent, and Société Générale as Security Trustee	CCH	8-K	10.1	7/2/2018
10.11	Registration Rights Agreement, dated as of November 13, 2019, among the Company and CCL, CCP and CCP GP, as guarantors, and BofA Securities, Inc., for itself and as representative of the purchasers	CCH	8-K	10.10	11/13/2019
10.12	Amended and Restated Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 2 Liquefaction Facility, dated December 12, 2017, by and between CCL and Bechtel Oil, Gas and Chemicals, Inc. (Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)	CCH	10-K/A	10.23	4/27/2018
10.13	Change orders to the Amended and Restated Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 2 Liquefaction Facility, dated as of December 12, 2017, between CCL and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-00001 Stage 2 EPC Agreement Revised Table A-2, dated May 18, 2018, (ii) the Change Order CO-00002 Stage 2 EPC Agreement Amended and Restated Attachment C, dated May 18, 2018, (iii) the Change Order CO-00003 Fuel Provisional Sum Adjustment, dated May 24, 2018, (iv) the Change Order CO-00004 Currency Provisional Sum Adjustment, dated May 29, 2018, (v) the Change Order CO-00005 JT Valve Modifications, dated July 10, 2018 and (vi) the Change Order CO-00006 Tank B Soil Conditions, International Building Code, and East Jetty Marine Facility Schedule Acceleration, dated September 5, 2018 (Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)	CCH	10-Q	10.10	11/8/2018



Exhibit No.		Incorporated by Reference (1)
Exhibit No.	Description	Entity	Form	Exhibit	Filing Date
10.14	Change orders to the Amended and Restated Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 2 Liquefaction Facility, dated as of December 12, 2017, between CCL and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-00007 Tell-Tale Signs, Additional Tie-Ins, and System Inspection Isometrics, dated October 15, 2018, (ii) the Change Order CO-00008 Insurance Provisional Sum Interim Adjustment, dated November 19, 2018 and (iii) the Change Order CO-00009 Traffic and Logistics Impacts Due to Enforcement of Electronic Logging Devices, dated November 28, 2018 (Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)	CCH	10-K	10.28	2/26/2019
10.15	Change orders to the Amended and Restated Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 2 Liquefaction Facility, dated as of December 12, 2017, between CCL and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-000010 OSHA Handrail Requirement Changes Impact, dated January 25, 2019, (ii) the Change Order CO-00011 Differing Soil Conditions - Train 3, dated March 7, 2019 and (iii) the Change Order CO-00012 Tank B Logo Deletion, dated March 25, 2019 (Portions of this exhibit have been omitted.)	CCH	10-Q	10.20	5/9/2019
10.16	Change orders to the Amended and Restated Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 2 Liquefaction Facility, dated as of December 12, 2017, between CCL and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-000013 Section 232 Steel and Aluminum Tariffs & Anti-dumping (ADA) and Countervailing Duties (CVD), dated May 2, 2019, (ii) the Change Order CO-00014 Tank B Jump-over Tie-In Interface - Long Lead Items, dated May 2, 2019 and (iii) the Change Order CO-00015 Section 232 Steel and Aluminum Tariffs & Anti-dumping (ADA) and Countervailing (CVD) Q1_2019, dated June 4, 2019 (Portions of this exhibit have been omitted.)	CCH	10-Q	10.20	8/8/2019
10.17	Change orders to the Amended and Restated Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 2 Liquefaction Facility, dated as of December 12, 2017, between CCL and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-000016 Tank B Jump-over Tie-In (Part 1) and Deletion of East Jetty Shroud, dated August 5, 2019, (ii) the Change Order CO-00017 H2S Removal Skid PSVs Modifications and Revision to Chemical Cleaning Milestones, dated August 5, 2019 and (iii) the Change Order CO-00018 Cold Box Redesign Major Permanent Plant Materials and Ethylene Cold Box’s E-1504 Partial Mockup, dated September 6, 2019 (Portions of this exhibit have been omitted.)	CCH	10-Q	10.50	11/1/2019
10.18*	Change orders to the Amended and Restated Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 2 Liquefaction Facility, dated as of December 12, 2017, between CCL and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-00019 Aircraft Warning Lights, dated September 23, 2019, (ii) the Change Order CO-00020 Section 232 Steel and Aluminum Tariffs & Anti-dumping (ADA) and Countervailing Duties (CVD) Q2_2019, dated October 8, 2019, (iii) the Change Order CO-00021 Spare Transition Joints for Potential Future Cold Box Modifications, dated October 8, 2019, (iv) the Change Order CO-00022 Modification of the Train 3 Methane Cold Box, dated December 6, 2019 and (v) the Change Order Co-00023 Section 232 Steel & Aluminum Tariffs & Anti-dumping (ADA) and Countervailing Duties (CVD) Q3_2019, dated December 10, 2019 (Portions of this exhibit have been omitted.)



Exhibit No.		Incorporated by Reference (1)
Exhibit No.	Description	Entity	Form	Exhibit	Filing Date
10.19	Operation and Maintenance Agreement, dated as of May 13, 2015, among Cheniere LNG O&M Services, LLC and CCL	CCH	S-4	10.14	1/5/2017
10.20	Operation and Maintenance Agreement, dated as of May 13, 2015, among Cheniere LNG O&M Services, LLC and CCP	CCH	S-4	10.15	1/5/2017
10.21	LNG Sale and Purchase Agreement (FOB), dated April 1, 2014, between CCL (Seller) and Endesa Generación, S.A. (Buyer)	Cheniere	8-K	10.10	4/2/2014
10.22	LNG Sale and Purchase Agreement (FOB), dated April 7, 2014, between CCL (Seller) and Endesa S.A. (Buyer)	Cheniere	8-K	10.10	4/8/2014
10.23	Assignment and Amendment Agreement, dated April 7, 2014, among Endesa Generación S.A., Endesa S.A. and CCL	Cheniere	10-Q	10.30	5/1/2014
10.24	Amendment No. 1 of LNG Sale and Purchase Agreement (FOB), dated July 23, 2015, between Endesa S.A. (Buyer) and CCL (Seller)	Cheniere	10-Q	10.90	10/30/2015
10.25	Amendment No. 2 of LNG Sale and Purchase Agreement (FOB), dated July 23, 2015, between Endesa S.A. (Buyer) and CCL (Seller)	Cheniere	10-Q	10.10	10/30/2015
10.26	Amended and Restated LNG Sale and Purchase Agreement (FOB), dated March 20, 2015, between CCL (Seller) and PT Pertamina (Persero) (Buyer)	Cheniere	10-Q	10.50	4/30/2015
10.27	Amendment No. 1, dated February 4, 2016, to Amended and Restated LNG Sale and Purchase Agreement (FOB) between CCL and PT Pertamina (Persero), dated March 20, 2015	CCH	S-4	10.22	1/5/2017
10.28	Amendment No. 2 of Amended and Restated LNG Sale and Purchase Agreement, dated June 27, 2019, between CCL and PT Pertamina (Persero)	CCH	10-Q	10.10	11/1/2019
10.29	LNG Sale and Purchase Agreement (FOB), dated June 2, 2014, between CCL (Seller) and Gas Natural Fenosa LNG SL (subsequently assigned to Gas Natural Fenosa LNG GOM, Limited) (Buyer)	Cheniere	8-K	10.10	6/2/2014
10.30	Amendment No. 1 of LNG Sale and Purchase Agreement (FOB), dated February 27, 2018, between CCL (Seller) and Gas Natural Fenosa LNG GOM, Limited (Buyer)	CCH	10-Q	10.50	5/4/2018
10.31	Amended and Restated Base LNG Sale and Purchase Agreement (FOB), dated as of November 28, 2014, between CCL and Cheniere Marketing International LLP	CCH	S-4	10.32	1/5/2017
10.32	Amendment No. 1, dated June 26, 2015, to Amended and Restated Base LNG Sale and Purchase Agreement (FOB), dated as of November 28, 2014, between CCL and Cheniere Marketing International LLP	CCH	S-4	10.33	1/5/2017
10.33	Amendment No. 2, dated December 27, 2016, to Amended and Restated Base LNG Sale and Purchase Agreement (FOB), dated as of November 28, 2014, between CCL and Cheniere Marketing International LLP	CCH	S-4	10.34	1/5/2017
10.34*	LNG Sale and Purchase Agreement (EOG Early IPM), dated December 30, 2019, between CCL (Seller) and Cheniere Marketing (Buyer)
21.1*	Subsidiaries of the Company
31.1*	Certification by President and Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
32.1**	Certification by President and 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



Exhibit No.		Incorporated by Reference (1)
Exhibit No.	Description	Entity	Form	Exhibit	Filing Date
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
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



(1)	Exhibits are incorporated by reference to reports of Cheniere (SEC File No. 001-16383) and CCH (SEC File No. 333-215435), as applicable.
*	Filed herewith.
**	Furnished herewith.

(c) Financial statements of affiliates whose securities are pledged as collateral — See Index to Financial Statements on page S-1.

The accompanying Financial Statements of our subsidiaries, CCL, CCP and CCP GP, are being provided pursuant to Rule 3-16 of Regulation S-X, which requires a registrant to file financial statements for each of its affiliates whose securities constitute a substantial portion of the collateral for registered securities.


ITEM 16.	FORM 10-K SUMMARY

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



CHENIERE CORPUS CHRISTI HOLDINGS, LLC

By:	/s/ *Michael J. Wortley*
	Michael J. Wortley
	President and Chief Financial Officer
	(Principal Executive and Financial Officer)
Date:	February 24, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



Signature	Title	Date

/s/ *Michael J. Wortley*	Manager, President and Chief Financial Officer (Principal Executive and Financial Officer)	February 24, 2020
Michael J. Wortley		February 24, 2020

/s/ *Aaron Stephenson*	Manager	February 24, 2020
Aaron Stephenson	Manager	February 24, 2020

/s/ *Leonard E. Travis*	Chief Accounting Officer (Principal Accounting Officer)	February 24, 2020
Leonard E. Travis	Chief Accounting Officer (Principal Accounting Officer)	February 24, 2020

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS OF SUBSIDIARIES INCLUDED

PURSUANT TO RULE 3-16 OF REGULATION S-X

S-1

Corpus Christi Liquefaction, LLC

Financial Statements

As of December 31, 2019 and 2018

and for the years ended December 31, 2019, 2018 and 2017

S-2

CORPUS CHRISTI LIQUEFACTION, LLC

FINANCIAL STATEMENTS

DEFINITIONS

As used in these Financial Statements, the terms listed below have the following meanings:

Common Industry and Other Terms



EPC		engineering, procurement and construction
GAAP		generally accepted accounting principles in the United States
Henry Hub		the final settlement price (in USD per MMBtu) for the New York Mercantile Exchange’s Henry Hub natural gas futures contract for the month in which a relevant cargo’s delivery window is scheduled to begin
LNG		liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
MMBtu		million British thermal units, an energy unit
mtpa		million tonnes per annum
SEC		U.S. Securities and Exchange Commission
SPA		LNG sale and purchase agreement
TBtu		trillion British thermal units, an energy unit
Train		an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of December 31, 2019 and the references to these entities used in these Financial Statements:

Unless the context requires otherwise, references to “the Company,” “we,” “us,” and “our” refer to Corpus Christi Liquefaction, LLC.

S-3

Independent Auditors’ Report

To the Member and Managers of

Corpus Christi Liquefaction, LLC:

We have audited the accompanying financial statements of Corpus Christi Liquefaction, LLC (the Company), which comprise the balance sheets as of December 31, 2019 and 2018, and the related statements of operations, member’s equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits.We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Corpus Christi Liquefaction, LLC as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in accordance with U.S. generally accepted accounting principles.

Emphasis of Matter

As discussed in Note 2 to the financial statements, in 2019, 2018, and 2017, the Company adopted new accounting guidance ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. Our opinion is not modified with respect to this matter.

/s/ KPMG LLP

Houston, Texas

S-4

CORPUS CHRISTI LIQUEFACTION, LLC

BALANCE SHEETS

(in thousands)



	December 31,
	2019		2018
ASSETS
Current assets
Cash and cash equivalents	$	—	$	—
Restricted cash	10,954		6,893
Accounts receivable	57,712		24,989
Accounts receivable—affiliate	57,547		27,241
Advances to affiliate	108,126		78,805
Inventory	66,947		25,093
Derivative assets	73,809		5,071
Derivative assets—related party	2,623		2,132
Other current assets	14,075		8,717
Other current assets—affiliate	4		633
Total current assets	391,797		179,574

Property, plant and equipment, net	10,798,568		9,662,863
Non-current derivative assets	61,217		11,114
Non-current derivative assets—related party	1,933		3,381
Other non-current assets, net	51,066		27,918
Total assets	$	11,304,581	$	9,884,850

LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable	$	6,610	$	15,186
Accrued liabilities	356,031		148,920
Accrued liabilities—related party	2,531		—
Due to affiliates	34,211		24,500
Derivative liabilities	6,920		13,569
Other current liabilities	364		—
Other current liabilities—affiliate	519		—
Total current liabilities	407,186		202,175

Non-current derivative liabilities	86,006		8,197
Other non-current liabilities	4,802		—
Other non-current liabilities—affiliate	1,284		—

Commitments and contingencies (see Note 11)

Member’s equity	10,805,303		9,674,478
Total liabilities and member’s equity	$	11,304,581	$	9,884,850

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

S-5

CORPUS CHRISTI LIQUEFACTION, LLC

STATEMENTS OF OPERATIONS

(in thousands)



	Year Ended December 31,
	2019		2018			2017
Revenues
LNG revenues	$	679,070	$	—		$	—
LNG revenues—affiliate	726,100		—			—
Total revenues	1,405,170		—			—

Expenses
Cost of sales (excluding depreciation and amortization expense shown separately below)	691,301		172			91
Cost of sales—affiliate	14,626		—			—
Cost of sales—related party	85,429		—			—
Operating and maintenance expense	220,715		2,089			3,008
Operating and maintenance expense—affiliate	104,597		1,178			2,331
Development expense	596		177			516
Development expense—affiliate	61		—			8
General and administrative expense	2,986		3,016			3,951
General and administrative expense—affiliate	11,260		2,087			1,127
Depreciation and amortization expense	195,809		3,460			810
Impairment expense and loss on disposal of assets	364		20			5,500
Total operating costs and expenses	1,327,744		12,199			17,342

Income (loss) from operations	77,426		(12,199		)	(17,342		)

Other income
Other income	260		40			5
Other income—affiliate	—		12			12
Total other income	260		52			17

Net income (loss)	$	77,686	$	(12,147	)	$	(17,325	)

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

S-6

CORPUS CHRISTI LIQUEFACTION, LLC

STATEMENTS OF MEMBER'S EQUITY

(in thousands)



	Cheniere Corpus Christi Holdings, LLC			Total Member’s Equity
Balance at December 31, 2016	$	5,687,512		$	5,687,512
Capital contributions	1,516,772			1,516,772
Net loss	(17,325		)	(17,325		)
Balance at December 31, 2017	7,186,959			7,186,959
Capital contributions	2,567,410			2,567,410
Distributions	(67,744		)	(67,744		)
Net loss	(12,147		)	(12,147		)
Balance at December 31, 2018	9,674,478			9,674,478
Capital contributions	2,670,627			2,670,627
Distributions	(1,617,488		)	(1,617,488		)
Net income	77,686			77,686
Balance at December 31, 2019	$	10,805,303		$	10,805,303

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

S-7

CORPUS CHRISTI LIQUEFACTION, LLC

STATEMENTS OF CASH FLOWS

(in thousands)



	Year Ended December 31,
	2019			2018			2017
Cash flows from operating activities
Net income (loss)	$	77,686		$	(12,147	)	$	(17,325	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expense	195,809			3,460			810
Total losses (gains) on derivatives, net	(45,375		)	(23		)	91
Total losses on derivatives, net—related party	957			—			—
Net cash used for settlement of derivative instruments	(2,306		)	—			—
Impairment expense and loss on disposal of assets	364			20			5,500
Other	1,473			—			—
Changes in operating assets and liabilities:
Accounts receivable	(57,654		)	(51		)	—
Accounts receivable—affiliate	(53,622		)	—			—
Advances to affiliate	(59,999		)	—			—
Inventory	(35,758		)	(23,746		)	—
Accounts payable and accrued liabilities	169,619			7,417			58
Accounts payable—related party	2,531			—			—
Due to affiliates	23,913			(459		)	1,561
Other, net	(6,681		)	(9,689		)	(1,202		)
Other, net—affiliate	94			(109		)	(667		)
Net cash provided by (used in) operating activities	211,051			(35,327		)	(11,174		)

Cash flows from investing activities
Property, plant and equipment, net	(1,258,348		)	(2,379,990		)	(1,530,642		)
Other	(1,781		)	4,843			25,045
Net cash used in investing activities	(1,260,129		)	(2,375,147		)	(1,505,597		)

Cash flows from financing activities
Capital contributions	2,670,627			2,485,111			1,516,771
Distributions	(1,617,488		)	(67,744		)	—
Net cash provided by financing activities	1,053,139			2,417,367			1,516,771

Net increase in cash, cash equivalents and restricted cash	4,061			6,893			—
Cash, cash equivalents and restricted cash—beginning of period	6,893			—			—
Cash, cash equivalents and restricted cash—end of period	$	10,954		$	6,893		$	—

Balances per Balance Sheets:



	December 31,
	2019		2018
Cash and cash equivalents	$	—	$	—
Restricted cash	10,954		6,893
Total cash, cash equivalents and restricted cash	$	10,954	$	6,893

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

S-8

CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND NATURE OF OPERATIONS

CCL is a Delaware limited liability company formed in 2011 by Cheniere to develop, construct and operate natural gas liquefaction and export facilities at the Corpus Christi LNG terminal near Corpus Christi, Texas (the “Liquefaction Facilities”). CCP owns and operates a 23-mile natural gas supply pipeline (the “Corpus Christi Pipeline” and together with the Liquefaction Facilities, the “Liquefaction Project”) that interconnects the Liquefaction Facilities with several interstate and intrastate natural gas pipelines. We are currently operating two Trains and are constructing one additional Train for a total production capacity of approximately 15 mtpa of LNG. The Liquefaction Project, once fully constructed, will contain three LNG storage tanks and two marine berths.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our Financial Statements have been prepared in accordance with GAAP.

Recent Accounting Standards

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and subsequent amendments thereto on January 1, 2019 using the optional transition approach to apply the standard at the beginning of the first quarter of 2019 with no retrospective adjustments to prior periods. This standard requires a lessee to recognize leases on its balance sheet by recording a lease 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. The adoption of the standard did not materially impact our Financial Statements. Upon adoption of the standard, we recorded right-of-use assets of $8.1 million in other non-current assets, net, and lease liabilities of $0.5 million in other current liabilities—affiliate, $5.2 million other non-current liabilities and $1.2 million in other non-current liabilities—affiliate.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance retrospectively eliminates the requirement to allocate the consolidated amount of current and deferred tax expense to entities that are not subject to income tax such as us, as further described under Income Taxes in this note. We early adopted this guidance effective December 31, 2019 and recorded a cumulative-effect adjustment to retained earnings of $144 thousand. The provision for income taxes, taxes payable and deferred income tax balances have been retrospectively removed from our Financial Statements.

Use of Estimates

The preparation of Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Financial Statements and the accompanying notes. Management evaluates its estimates and related assumptions regularly, including those related to fair value measurements, revenue recognition, property, plant and equipment and derivative instruments, as further discussed under the respective sections within this note. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Hierarchy Levels 1, 2 and 3 are terms for the priority of inputs to valuation approaches used to measure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs that are directly or indirectly observable for the asset or liability, other than quoted prices included within Level 1. Hierarchy Level 3 inputs are inputs that are not observable in the market.

S-9

CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Recurring fair-value measurements are performed for derivative instruments as disclosed in Note 6—Derivative Instruments. The carrying amount of restricted cash, accounts receivable and accounts payable reported on the Balance Sheets approximate fair value.

Revenue Recognition

We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. Revenues from the sale of LNG are recognized as LNG revenues. See Note 9—Revenues from Contracts with Customers for further discussion of revenues.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

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 December 31, 2019 and 2018, restricted cash consisted of funds restricted for the development, construction and operation of the Liquefaction Project.

Accounts Receivable

Accounts receivable is reported net of any allowances for doubtful accounts. We periodically review the collectability on our accounts receivable and recognize an allowance if there is probability of non-collection, based on historical write-off and customer-specific factors. We did not have an allowance on our accounts receivable as of December 31, 2019 and 2018.

Inventory

LNG and natural gas inventory is recorded at the lower of weighted average cost and net realizable value. Materials and other inventory are recorded at the lower of cost and net realizable value and subsequently charged to expense when issued.

Accounting for LNG Activities

Generally, we begin capitalizing the costs of a Train once it meets the following criteria: (1) regulatory approval has been received, (2) financing for the Train is available and (3) management has committed to commence construction. Prior to meeting these criteria, most of the costs associated with a Train are expensed as incurred. These costs primarily include professional fees associated with preliminary front-end engineering and design work, costs of securing necessary regulatory approvals and other preliminary investigation and development activities related to the Train.

Property, Plant and Equipment

S-10

CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Management tests property, plant and equipment for impairment whenever events or changes in circumstances have indicated that the carrying amount of property, plant and equipment might not be recoverable. Assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of the cash flows of other groups of assets for purposes of assessing recoverability. Recoverability generally is determined by comparing the carrying value of the asset to the expected undiscounted future cash flows of the asset. If the carrying value of the asset is not recoverable, the amount of impairment loss is measured as the excess, if any, of the carrying value of the asset over its estimated fair value. During the year ended December 31, 2017, we recognized $5.5 million of impairment expense related to damaged infrastructure as an effect of Hurricane Harvey.

Derivative Instruments

We use derivative instruments to hedge our exposure to cash flow variability from commodity price risk. Derivative instruments are recorded at fair value and included in our Balance Sheets as assets or liabilities depending on the derivative position and the expected timing of settlement, unless they satisfy criteria for and we elect the normal purchases and sales exception. When we have the contractual right and intend to net settle, derivative assets and liabilities are reported on a net basis.

Changes in the fair value of our derivative instruments are recorded in earnings, unless we elect to apply hedge accounting and meet specified criteria. We did not have any derivative instruments designated as cash flow or fair value hedges during the years ended December 31, 2019, 2018 and 2017. See Note 6—Derivative Instruments for additional details about our derivative instruments.

Concentration of Credit Risk

The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments. Certain of our commodity derivative transactions are executed through over-the-counter contracts which are subject to nominal credit risk as these transactions are settled on a daily margin basis with investment grade financial institutions. Collateral deposited for such contracts is recorded as other current asset. We monitor counterparty creditworthiness on an ongoing basis; however, we cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, we may be limited in our ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, we may not realize the benefit of some of our derivative instruments.

We have entered into fixed price SPAs generally with terms of 20 years with nine third parties and have entered into agreements with Cheniere Marketing International LLP (“Cheniere Marketing”). We are dependent on the respective customers’ creditworthiness and their willingness to perform under their respective SPAs. See Note 12—Customer Concentration for additional details about our customer concentration.

Income Taxes

We are a disregarded entity for federal and state income tax purposes. Our taxable income or loss, which may vary substantially from the net income or loss reported on our Statements of Operations, is included in the consolidated federal income tax return of Cheniere. Accordingly, no provision or liability for federal or state income taxes is included in the accompanying Financial Statements.

Business Segment

Our liquefaction business at the Corpus Christi LNG terminal represents a single reportable segment. Our chief operating decision maker reviews the financial results of CCL in total when evaluating financial performance and for purposes of allocating resources.

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

NOTE 3—ACCOUNTS AND OTHER RECEIVABLES

As of December 31, 2019 and 2018, accounts and other receivables consisted of the following (in thousands):



	December 31,
	2019		2018
Trade receivable	$	44,403	$	51
Other accounts receivable	13,309		24,938
Total accounts and other receivables	$	57,712	$	24,989

NOTE 4—INVENTORY

As of December 31, 2019 and 2018, inventory consisted of the following (in thousands):



	December 31,
	2019		2018
Natural gas	$	6,870	$	1,326
LNG	6,103		—
Materials and other	53,974		23,767
Total inventory	$	66,947	$	25,093

NOTE 5—PROPERTY, PLANT AND EQUIPMENT

As of December 31, 2019 and 2018, property, plant and equipment, net consisted of the following (in thousands):



	December 31,
	2019			2018
LNG terminal costs
LNG terminal	$	8,564,732		$	218,288
LNG site and related costs	273,646			42,551
LNG terminal construction-in-process	2,142,452			9,392,758
Accumulated depreciation	(192,577		)	(1,503		)
Total LNG terminal costs, net	10,788,253			9,652,094
Fixed assets
Fixed assets	16,535			13,366
Accumulated depreciation	(6,220		)	(2,597		)
Total fixed assets, net	10,315			10,769
Property, plant and equipment, net	$	10,798,568		$	9,662,863

Depreciation expense was $195.0 million, $3.2 million and $0.7 million during the years ended December 31, 2019, 2018 and 2017, respectively.

We realized offsets to LNG terminal costs of $156.1 million and $48.7 million during the years ended December 31, 2019 and 2018, respectively, that were related to the sales of commissioning cargoes because these amounts were earned or loaded prior to the start of commercial operations of the Liquefaction Project, during the testing phase . We did not realize any offsets to LNG terminal costs during the year ended December 31, 2017.

LNG Terminal Costs

LNG terminal costs related to the Liquefaction Project are depreciated using the straight-line depreciation method applied to groups of LNG terminal assets with varying useful lives. The identifiable components of the Liquefaction Project have depreciable lives between 10 and 50 years, as follows:



Components		Useful life (yrs)
Water pipelines		30
Liquefaction processing equipment		10-50
Other		15-30

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Fixed Assets and Other

Our fixed assets and other are recorded at cost and are depreciated on a straight-line method based on estimated lives of the individual assets or groups of assets.

NOTE 6—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 Operations to the extent not utilized for the commissioning process.



	Fair Value Measurements as of
	December 31, 2019								December 31, 2018
	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)	$	2,383	$	9,198	$	35,075	$	46,656	$	1,299	$	2,990	$	(4,357	)	$	(68	)

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.

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

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. The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of December 31, 2019:



	Net Fair Value Asset (in thousands)	Valuation Approach	Significant Unobservable Input	Significant Unobservable Inputs Range
Physical Liquefaction Supply Derivatives	$35,075	Market approach incorporating present value techniques	Henry Hub basis spread	$(0.718) - $0.050
		Option pricing model	International LNG pricing spread, relative to Henry Hub (1)	86% - 191%

(1) Spread contemplates U.S. dollar-denominated pricing.

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



	Year Ended December 31,
	2019			2018			2017
Balance, beginning of period	$	(4,357	)	$	(91	)	$	—
Realized and mark-to-market gains (losses):
Included in cost of sales	(82,645		)	(9,944		)	—
Purchases and settlements:
Purchases	120,755			5,678			(91		)
Settlements	1,432			—			—
Transfers out of Level 3 (1)	(110		)	—			—
Balance, end of period	$	35,075		$	(4,357	)	$	(91	)
Change in unrealized losses relating to instruments still held at end of period	$	(82,645	)	$	(9,944	)	$	—


(1)	Transferred to Level 2 as a result of observable market for the underlying natural gas purchase agreements.

The forward notional for our Liquefaction Supply Derivatives was approximately 3,153 TBtu and 2,854 TBtu as of December 31, 2019 and 2018, respectively, of which 120 TBtu and 55 TBtu, respectively, were for a natural gas supply contract CCL has with a related party. The remaining terms of the physical natural gas supply contracts range up to eight years, some of which commence upon the satisfaction of certain conditions precedent.

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

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



	Fair Value Measurements as of (1)
Balance Sheet Location	December 31, 2019			December 31, 2018
Derivative assets	$	73,809		$	5,071
Derivative assets—related party	2,623			2,132
Non-current derivative assets	61,217			11,114
Non-current derivative assets—related party	1,933			3,381
Total derivative assets	139,582			21,698

Derivative liabilities	(6,920		)	(13,569		)
Non-current derivative liabilities	(86,006		)	(8,197		)
Total derivative liabilities	(92,926		)	(21,766		)

Derivative asset (liability), net	$	46,656		$	(68	)


(1)	Does not include collateral posted with counterparties by us of $4.5 million for such contracts, which are included in other current assets in our Balance Sheets as of both December 31, 2019 and 2018.

The following table shows the changes in the fair value, settlements and location of our Liquefaction Supply Derivatives recorded on our Statements of Operations during the years ended December 31, 2019, 2018 and 2017 (in thousands):



		Year Ended December 31,
	Statements of Operations Location (1)	2019			2018		2017
Liquefaction Supply Derivatives gain	LNG revenues	$	227		$	—	$	—
Liquefaction Supply Derivatives gain (loss)	Cost of sales	45,148			23		(91		)
Liquefaction Supply Derivatives loss	Cost of sales—related party	(957		)	—		—


(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 Sheet Presentation

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



	Gross Amounts Recognized			Gross Amounts Offset in the Balance Sheets			Net Amounts Presented in the Balance Sheets
Offsetting Derivative Assets (Liabilities)	Gross Amounts Recognized			Gross Amounts Offset in the Balance Sheets			Net Amounts Presented in the Balance Sheets
As of December 31, 2019
Liquefaction Supply Derivatives	$	145,135		$	(5,553	)	$	139,582
Liquefaction Supply Derivatives	(98,625		)	5,699			(92,926		)
As of December 31, 2018
Liquefaction Supply Derivatives	$	31,770		$	(10,072	)	$	21,698
Liquefaction Supply Derivatives	(29,996		)	8,230			(21,766		)

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

NOTE 7—OTHER NON-CURRENT ASSETS

As of December 31, 2019 and 2018, other non-current assets, net consisted of the following (in thousands):



	December 31,
	2019		2018
Advances and other asset conveyances to third parties to support LNG terminal	$	18,703	$	18,209
Operating lease assets	7,215		—
Tax-related payments and receivables	3,200		3,783
Information technology service prepayments	2,720		2,251
Advances made under EPC and non-EPC contracts	14,067		—
Other	5,161		3,675
Total other non-current assets, net	$	51,066	$	27,918

NOTE 8—ACCRUED LIABILITIES

As of December 31, 2019 and 2018, accrued liabilities consisted of the following (in thousands):



	December 31,
	2019		2018
Accrued natural gas purchases	$	132,148	$	—
Liquefaction Project costs	191,093		129,633
Other	32,790		19,287
Total accrued liabilities	$	356,031	$	148,920

NOTE 9—REVENUES FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue earned from contracts with customers during the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
LNG revenues	$	678,843	$	—	$	—
LNG revenues—affiliate	726,100		—		—
Total revenues from customers	1,404,943		—		—
Net derivative gains (1)	227		—		—
Total revenues	$	1,405,170	$	—	$	—

(1) See Note 6—Derivative Instruments for additional information about our derivatives.

LNG Revenues

We have entered into numerous SPAs with third party customers for the sale of LNG on a free on board (“FOB”) (delivered to the customer at the Corpus Christi LNG terminal) basis. Our customers generally purchase LNG for a price consisting of a fixed fee per MMBtu of LNG (a portion of which is subject to annual adjustment for inflation) plus a variable fee per MMBtu of LNG equal to approximately 115% of Henry Hub. The fixed fee component is the amount payable to us regardless of a cancellation or suspension of LNG cargo deliveries by the customers. The variable fee component is the amount generally payable to us only upon delivery of LNG plus all future adjustments to the fixed fee for inflation. The SPAs and contracted volumes to be made available under the SPAs are not tied to a specific Train; however, the term of each SPA generally commences upon the date of first commercial delivery of a specified Train. Additionally, we have agreements with Cheniere Marketing for which the related revenues are recorded as LNG revenues—affiliate. See Note 10—Related Party Transactions for additional information regarding these agreements.

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

both fixed and variable fees) per MMBtu in each LNG sales arrangement is representative of the stand-alone selling price for LNG at the time the contract was negotiated. We have concluded that the variable fees meet the exception for allocating variable consideration to specific parts of the contract. As such, the variable consideration for these contracts is allocated to each distinct molecule of LNG and recognized when that distinct molecule of LNG is delivered to the customer. Because of the use of the exception, variable consideration related to the sale of LNG is also not included in the transaction price.

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. 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 December 31, 2019 and 2018:



	December 31, 2019			December 31, 2018
	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)
LNG revenues	$	33.6	11	$	33.9	12
LNG revenues—affiliate	1.0		13	1.0		14
Total revenues	$	34.6		$	34.9


(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 44% during the year ended December 31, 2019 of our LNG revenues were related to variable consideration received from customers. All of our LNG revenues—affiliate were related to variable consideration received from customers during the year ended December 31, 2019.

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

NOTE 10—RELATED PARTY TRANSACTIONS

Below is a summary of our related party transactions as reported on our Statements of Operations for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
LNG revenues—affiliate
SPAs and Base SPAs	$	719,069	$	—	$	—
Contracts for Sale and Purchase of Natural Gas and LNG	7,031		—		—
Total LNG revenue—affiliate	726,100		—		—

Cost of sales—affiliate
Transportation Agreement	5,868		—		—
Contracts for Sale and Purchase of Natural Gas and LNG	8,758		—		—
Total cost of sales—affiliate	14,626		—		—

Cost of sales—related party
Natural Gas Supply Agreement	85,429		—		—

Operating and maintenance expense—affiliate
Services Agreements	50,681		298		2,005
Land Agreements	53,916		880		326
Total operating and maintenance expense—affiliate	104,597		1,178		2,331

Development expense—affiliate
Services Agreements	61		—		8

General and administrative expense—affiliate
Services Agreements	11,260		2,087		1,127

Other income—affiliate
Land Agreements	—		12		12

We had $34.2 million and $24.5 million due to affiliates as of December 31, 2019 and 2018, respectively, under agreements with affiliates, as described below.

LNG Sale and Purchase Agreements

We have a fixed price SPA with Cheniere Marketing (the “Cheniere Marketing Base SPA”) with a term of 20 years which allows Cheniere Marketing to purchase, at its option, (1) up to a cumulative total of 150 TBtu of LNG within the commissioning periods for Trains 1 through 3, (2) any LNG produced from the end of the commissioning period for Train 1 until the date of first commercial delivery of LNG from Train 1 and (3) any excess LNG produced by the Liquefaction Facilities that is not committed to customers under third-party SPAs. Under the Cheniere Marketing Base SPA, Cheniere Marketing may, without charge, elect to suspend deliveries of cargoes (other than commissioning cargoes) scheduled for any month under the applicable annual delivery program by providing specified notice in advance. Additionally, we have: (1) a fixed price SPA with an approximate term of 23 years with Cheniere Marketing which allows them to purchase volumes of approximately 15 TBtu per annum of LNG and (2) an SPA for 0.85 mtpa of LNG with a term of up to seven years associated with the integrated production marketing gas supply agreement between us and EOG Resources, Inc. As of December 31, 2019 and 2018, we had $57.2 million and $21.1 million of accounts receivable—affiliate, respectively, under these agreements.

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Services Agreements

Gas and Power Supply Services Agreement (“G&P Agreement”)

We have a G&P Agreement with Cheniere Energy Shared Services, Inc. (“Shared Services”), a wholly owned subsidiary of Cheniere, pursuant to which Shared Services will manage our gas and power procurement requirements. The services include, among other services, exercising the day-to-day management of our natural gas and power supply requirements, negotiating agreements on our behalf and providing other administrative services. Prior to the substantial completion of each Train of the Liquefaction Facilities, no monthly fee payment is required except for reimbursement of operating expenses. After substantial completion of each Train of the Liquefaction Facilities, for services performed while the Liquefaction Facilities is operational, we will pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $125,000 (indexed for inflation) for services with respect to such Train.

Operation and Maintenance Agreement (“O&M Agreement”)

We have an O&M Agreement with Cheniere LNG O&M Services, LLC (“O&M Services”), a wholly owned subsidiary of Cheniere, pursuant to which we receive all of the necessary services required to construct, operate and maintain the Liquefaction Facilities. The services to be provided include, among other services, preparing and maintaining staffing plans, identifying and arranging for procurement of equipment and materials, overseeing contractors, administering various agreements, information technology services and other services required to operate and maintain the Liquefaction Facilities. Prior to the substantial completion of each Train of the Liquefaction Facilities, no monthly fee payment is required except for reimbursement of operating expenses. After substantial completion of each Train of the Liquefaction Facilities, for services performed while the Liquefaction Facilities is operational, we will pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $125,000 (indexed for inflation) for services with respect to such Train.

Management Services Agreement (“MSA”)

We have an MSA with Shared Services pursuant to which Shared Services manages the construction and operation of the Liquefaction Facilities, excluding those matters provided for under the G&P Agreement and the O&M Agreement. The services include, among other services, exercising the day-to-day management of our affairs and business, managing our regulatory matters, preparing status reports, providing contract administration services for all contracts associated with the Liquefaction Facilities and obtaining insurance. Prior to the substantial completion of each Train of the Liquefaction Facilities, no monthly fee payment is required except for reimbursement of expenses. After substantial completion of each Train, we will pay, in addition to the reimbursement of related expenses, a monthly fee equal to 3% of the capital expenditures incurred in the previous month and a fixed monthly fee of $375,000 for services with respect to such Train.

Natural Gas Supply Agreement

We entered into a natural gas supply contract to obtain feed gas for the operation of the Liquefaction Project through March 2022 with a related party in the ordinary course of business. We have recorded $85.4 million in cost of sales—related party under this contract during the year ended December 31, 2019. Of this amount, $2.5 million and zero was included in accrued liabilities—related party as of December 31, 2019 and 2018, respectively. We did not have any deliveries during the year ended December 31, 2018 under this contract. We also have recorded derivative assets—related party of $2.6 million and $2.1 million and non-current derivative assets—related party of $1.9 million and $3.4 million as of December 31, 2019 and 2018, respectively, related to this contract.

Agreements with Midship Pipeline

We have entered into a transportation precedent agreement and a negotiated rate agreement with Midship Pipeline Company, LLC (“Midship Pipeline”) to secure firm pipeline transportation capacity for a period of 10 years following commencement of the approximately 200-mile natural gas pipeline project which Midship Pipeline is constructing. In May 2018, we issued a letter of credit to Midship Pipeline for drawings up to an aggregate maximum amount of $16.2 million. Midship Pipeline had not made any drawings on this letter of credit as of December 31, 2019.

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Contracts for Sale and Purchase of Natural Gas and LNG

We have agreements with Sabine Pass Liquefaction, LLC and CCP that allows us to sell and purchase natural gas with each party. Natural gas purchased under these agreements are 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 are recorded as LNG revenues—affiliate.

We also have an agreement with Midship Pipeline that allows us to sell and purchase natural gas with Midship Pipeline. We did not have any transactions under this agreement during the years ended December 31, 2019, 2018 and 2017.

Land Agreements

We had $4.0 thousand and $0.3 million as of December 31, 2019 and 2018, respectively, of prepaid expense related to these agreements in other current assets—affiliate.

Lease Agreements

We have agreements with Cheniere Land Holdings, LLC (“Cheniere Land Holdings”), a wholly owned subsidiary of Cheniere, to lease the land owned by Cheniere Land Holdings for the Liquefaction Facilities. The total annual lease payment is $0.6 million, and the terms of the agreements range from three to five years.

CCP has an agreement with us to lease a portion of the Liquefaction Facilities site for the purpose of the construction and operation of a meter station to measure the amount of natural gas delivered to the Liquefaction Facilities. The annual lease payment is $12,000, which is recorded as an offset to operating and maintenance expense—affiliate, upon adoption of ASC 842. The initial term of the lease is 30 years, with options to renew for six 10-year extensions with similar terms as the initial term. In conjunction with this lease, we also have a pipeline right of way easement agreement with CCP granting CCP the right to construct, install and operate a natural gas pipeline on the Liquefaction Facilities site.

Easement Agreements

We have agreements with Cheniere Land Holdings which grant us easements on land owned by Cheniere Land Holdings for the Liquefaction Facilities. The total annual payment for easement agreements is $0.1 million, excluding any previously paid one-time payments, and the terms of the agreements range from three to five years.

Access Road Use License Agreement

In February 2018, we entered into an agreement with CCP which grants them a limited license to enter the access road owned by us for access to the Liquefaction Facilities. The annual payment for this agreement is $5 thousand, and the term of the agreement is five years.

Dredge Material Disposal Agreement

We have a dredge material disposal agreement with Cheniere Land Holdings that terminates in 2042 which grants us permission to use land owned by Cheniere Land Holdings for the deposit of dredge material from the construction and maintenance of the Liquefaction Facilities. Under the terms of the agreement, we will pay Cheniere Land Holdings $0.50 per cubic yard of dredge material deposits up to 5.0 million cubic yards and $4.62 per cubic yard for any quantities above that.

Tug Hosting Agreement

In February 2017, we entered into a tug hosting agreement with Corpus Christi Tug Services, LLC (“Tug Services”), a wholly owned subsidiary of Cheniere, to provide certain marine structures, support services and access necessary at the Liquefaction Facilities for Tug Services to provide its customers with tug boat and marine services. Tug Services is required to reimburse us for any third party costs incurred by us in connection with providing the goods and services.

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Natural Gas Transportation Agreements

We have a transportation precedent agreement, a firm transportation service agreement and a negotiated rate agreement with CCP for firm gas transportation capacity for up to three Trains on both a forward and back haul basis from the interstate and intrastate pipeline grid to the Liquefaction Facilities. These agreements have a primary term of 20 years from April 2019, and thereafter continue in effect from year to year until terminated by either party upon written notice of one year or the term of the agreements, whichever is less. Maximum rates, charges and fees shall be applicable for the entitlements and quantities delivered pursuant to the agreements unless CCP has advised us that it has agreed otherwise. We had $7.4 million and $1.1 million included in due to affiliate as of December 31, 2019 and 2018, respectively, under the transportation agreement.

Operational Balancing Agreement

We have an amended Operational Balancing Agreement (“OBA”) with CCP that provides for the resolution of any operational imbalances (1) during the term of the agreement on an in-kind basis and (2) upon termination of the agreement by cash-out at a rate equivalent to the average of the midpoint prices for East Texas—Houston Ship Channel pricing published in Platts’ “Gas Daily Price Guide - Final Daily Price Survey” for each day of the month following termination. As of December 31, 2019 and 2018 we had $1.8 million and $6.2 million in accounts receivable—affiliate, respectively, under the amended OBA.

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 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 May 2015.

NOTE 11—COMMITMENTS AND CONTINGENCIES

We have various contractual obligations which are recorded as liabilities in our Financial Statements. Other items, such as certain purchase commitments and other executed contracts which do not meet the definition of a liability as of December 31, 2019, are not recognized as liabilities but require disclosures in our Financial Statements.

LNG Terminal Commitments and Contingencies

Obligations under EPC Contracts

We have lump sum turnkey contracts with Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) for the engineering, procurement and construction of Train 3 of the Liquefaction Project. The EPC contract prices for Train 3 of the Liquefaction Project is approximately $2.4 billion, reflecting amounts incurred under change orders through December 31, 2019. As of December 31, 2019, we have incurred $2.0 billion under this contract. We have the right to terminate each of the EPC contracts for our convenience, in which case Bechtel will be paid (1) the portion of the contract price for the work performed, (2) costs reasonably incurred by Bechtel on account of such termination and demobilization and (3) a lump sum of up to $30 million depending on the termination date.

Obligations under SPAs

We have third-party SPAs which obligate us to purchase and liquefy sufficient quantities of natural gas to deliver contracted volumes of LNG to the customers’ vessels, subject to completion of construction of specified Trains of the Liquefaction Project. We also have entered into SPAs with Cheniere Marketing, as further described in Note 10—Related Party Transactions.

Obligations under Natural Gas Supply, Transportation and Storage Service Agreements

We have physical natural gas supply contracts to secure natural gas feedstock for the Liquefaction Project. The remaining terms of these contracts range up to eight years, some of which commence upon the satisfaction of certain events or states of affairs.

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CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

As of December 31, 2019, we had secured up to approximately 2,999 TBtu of natural gas feedstock through natural gas supply contracts, a portion of which are considered purchase obligations if the certain events or states of affairs are satisfied.

Additionally, we have natural gas transportation and storage service agreements for the Liquefaction Project. The initial terms of the natural gas transportation agreements range up 20 years, with renewal options for certain contracts, and commences upon the occurrence of conditions precedent. The initial term of the natural gas storage service agreements ranges up to five years.

As of December 31, 2019, our obligations under natural gas supply, transportation and storage service agreements for contracts in which conditions precedent were met were as follows (in thousands):



Years Ending December 31,	Payments Due (1)
2020	$	1,255,512
2021	1,047,335
2022	711,428
2023	591,844
2024	483,856
Thereafter	2,072,188
Total	$	6,162,163


(1)	Pricing of natural gas supply contracts are variable based on market commodity basis prices adjusted for basis spread. Amounts included are based on estimated forward prices and basis spreads as of December 31, 2019.

Services Agreements

We have certain services agreements with affiliates. See Note 10—Related Party Transactions for information regarding such agreements.

State Tax Sharing Agreement

We have a state tax sharing agreement with Cheniere. See Note 10—Related Party Transactions for information regarding this agreement.

Obligations under Guarantee Contract

The subsidiaries of CCH, including us, have jointly and severally guaranteed the debt obligations of CCH. See Note 14—Guarantees and Collateralization for information regarding these guarantees.

Other Commitments

In the ordinary course of business, we have entered into certain multi-year licensing and service agreements, none of which are considered material to our financial position.

Environmental and Regulatory Matters

The Liquefaction Facilities is subject to extensive regulation under federal, state and local statutes, rules, regulations and laws. These laws require that we engage in consultations with appropriate federal and state agencies and that we obtain and maintain applicable permits and other authorizations. Failure to comply with such laws could result in legal proceedings, which may include substantial penalties. We believe that, based on currently known information, compliance with these laws and regulations will not have a material adverse effect on our results of operations, financial condition or cash flows.

Legal Proceedings

S-22

CORPUS CHRISTI LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

disposition of these matters. In the opinion of management, as of December 31, 2019, there were no pending legal matters that would reasonably be expected to have a material impact on our operating results, financial position or cash flows.

NOTE 12—CUSTOMER CONCENTRATION



	Percentage of Total Revenues from External Customers			Percentage of Accounts Receivable from External Customers
	Year Ended December 31,			December 31,
	2019	2018	2017	2019	2018
Customer A	57%	—%	—%	38%	—%
Customer B	23%	—%	—%	39%	—%

The following table shows revenues from external customers attributable to the country in which the revenues were derived (in thousands). We attribute revenues from external customers to the country in which the party to the applicable agreement has its principal place of business. All of our long-lived assets are located in the United States.



	Revenues from External Customers
	Year Ended December 31,
	2019		2018		2017
Spain	$	451,199	$	—	$	—
Indonesia	154,584		—		—
United States	73,287		—		—
Total	$	679,070	$	—	$	—

NOTE 13—SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental disclosure of cash flow information (in thousands):



	Year Ended December 31,
	2019		2018		2017
Non-cash capital contribution for conveyance of property, plant and equipment from affiliate	$	—	$	82,299	$	—
Non-cash capital contribution of net operating losses from affiliate	—		144		—

The balance in property, plant and equipment, net funded with accounts payable and accrued liabilities (including affiliate) was $182.5 million, $168.9 million and $110.3 million as of December 31, 2019, 2018 and 2017, respectively.

NOTE 14—GUARANTEES AND COLLATERIZATION

The subsidiaries of CCH, including us, have jointly and severally guaranteed and collaterized the debt obligations of CCH, including: (1) $1.25 billion of the 7.000% Senior Secured Notes due 2024, (2) $1.5 billion of the 5.875% Senior Secured Notes due 2025, (3) $1.5 billion of the 5.125% Senior Secured Notes due 2027, (4) $727 million of the 4.80% Senior Secured Notes due 2039, (5) $475 million of the 3.925% Senior Secured Notes due 2039, (6) $1.5 billion of the 3.700% Senior Secured Notes due 2029, (7) a term loan facility of which CCH had no available commitments and approximately $3.3 billion of outstanding borrowings as of December 31, 2019 and (8) a $1.2 billion working capital facility of which CCH had $729.2 million of available commitments and no outstanding borrowings as of December 31, 2019. CCH entered into the above debt instruments and its use is solely to fund a portion of the costs associated with the development, construction, operation and maintenance of the Liquefaction Project and related business purposes. As of December 31, 2019, we had no liability recorded related to these guarantees.

S-23

Cheniere Corpus Christi Pipeline, L.P.

Financial Statements

As of December 31, 2019 and 2018

and for the years ended December 31, 2019, 2018 and 2017

S-24

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

FINANCIAL STATEMENTS

DEFINITIONS

As used in these Financial Statements, the terms listed below have the following meanings:

Common Industry and Other Terms



GAAP		generally accepted accounting principles in the United States
LNG		liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
SEC		U.S. Securities and Exchange Commission
Train		an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of December 31, 2019 and the references to these entities used in these Financial Statements:

Unless the context requires otherwise, references to “CCP,” “the Partnership,” “we,” “us,” and “our” refer to Cheniere Corpus Christi Pipeline, L.P.

S-25

Independent Auditors’ Report

To the Managers of Corpus Christi Pipeline GP, LLC and

Partners of Cheniere Corpus Christi Pipeline, L.P.:

We have audited the accompanying financial statements of Cheniere Corpus Christi Pipeline, L.P. (the Partnership), which comprise the balance sheets as of December 31, 2019 and 2018, and the related statements of operations, partners’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Auditors’ Responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cheniere Corpus Christi Pipeline, L.P. as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in accordance with U.S. generally accepted accounting principles.

Emphasis of Matter

As discussed in Note 2 to the financial statements, in 2019, 2018, and 2017, the Partnership adopted new accounting guidance ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. Our opinion is not modified with respect to this matter.

/s/ KPMG LLP

Houston, Texas

S-26

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

BALANCE SHEETS

(in thousands)



	December 31,
	2019		2018
ASSETS
Current assets
Cash and cash equivalents	$	—	$	—
Restricted cash	—		—
Accounts receivable—affiliate	7,372		1,100
Advances to affiliate	7,350		15,592
Inventory	2,232		1,105
Operational balancing assets	190		6,106
Operational balancing assets—affiliate	1,819		—
Other current assets	338		216
Total current assets	19,301		24,119

Property, plant and equipment, net	383,457		376,658
Other non-current assets, net	4,746		3,790
Total assets	$	407,504	$	404,567

LIABILITIES AND PARTNERS’ EQUITY
Current liabilities
Accounts payable	$	648	$	945
Accrued liabilities	4,451		12,033
Due to affiliates	1,879		1,679
Operational balancing liabilities—affiliate	—		6,189
Other current liabilities—affiliate	12		—
Total current liabilities	6,990		20,846

Other non-current liabilities	5,631		—
Other non-current liabilities—affiliate	170		—

Commitments and contingencies (see Note 7)

Partners’ equity	394,713		383,721
Total liabilities and partners’ equity	$	407,504	$	404,567

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

S-27

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

STATEMENTS OF OPERATIONS

(in thousands)



	Year Ended December 31,
	2019			2018			2017

Revenues
Pipeline revenues—affiliate	$	61,875		$	1,559		$	—
Other revenues—affiliate	4,241			—			—
Total revenues	66,116			1,559			—

Expenses
Operating and maintenance expense (recovery)	21,312			(2,185		)	16
Operating and maintenance expense (recovery)—affiliate	(806		)	9,315			82
General and administrative expense	1,028			718			234
General and administrative expense—affiliate	92			114			46
Depreciation and amortization expense	10,725			6,160			69
Other expense	—			—			5
Total expenses	32,351			14,122			452

Income (loss) from operations	33,765			(12,563		)	(452		)

Other income
Other income	268			7,912			15,575
Other income—affiliate	5			5			—
Total other income	273			7,917			15,575

Net income (loss)	$	34,038		$	(4,646	)	$	15,123

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

S-28

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

STATEMENTS OF PARTNERS’ EQUITY

(in thousands)



	Corpus Christi Pipeline GP, LLC		Cheniere Corpus Christi Holdings, LLC			Total Partners’ Equity
Balance at December 31, 2016	$	1	$	123,228		$	123,229
Capital contributions	—		203,660			203,660
Distributions	—		(157		)	(157		)
Net income	—		15,123			15,123
Balance at December 31, 2017	1		341,854			341,855
Capital contributions	—		47,907			47,907
Distributions	—		(1,395		)	(1,395		)
Net loss	—		(4,646		)	(4,646		)
Balance at December 31, 2018	1		383,720			383,721
Capital contributions	—		40,713			40,713
Distributions	—		(63,759		)	(63,759		)
Net income	—		34,038			34,038
Balance at December 31, 2019	$	1	$	394,712		$	394,713

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

S-29

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

STATEMENTS OF CASH FLOWS

(in thousands)



	Year Ended December 31,
	2019			2018			2017
Cash flows from operating activities
Net income (loss)	$	34,038		$	(4,646	)	$	15,123
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expense	10,726			6,160			69
Allowance for funds used during construction	(268		)	(7,912		)	(15,575		)
Other	131			—			5
Changes in operating assets and liabilities:
Accounts receivable—affiliate	(6,272		)	(1,100		)	—
Advances to affiliate	6,769			(10,911		)	—
Inventory	(1,127		)	(1,105		)	—
Operational balancing assets	5,916			(6,106		)	—
Regulatory assets	(635		)	(158		)	—
Accounts payable and accrued liabilities	1,450			2,862			26
Due to affiliates	629			989			6
Operational balancing assets and liabilities—affiliate	(8,007		)	6,189			—
Regulatory liabilities	5,631			—			—
Other, net	(296		)	(379		)	(157		)
Other, net—affiliate	(3		)	—			—
Net cash provided by (used in) operating activities	48,682			(16,117		)	(503		)

Cash flows from investing activities
Property, plant and equipment, net	(25,359		)	(27,463		)	(203,000		)
Other	(277		)	(2,174		)	—
Net cash used in investing activities	(25,636		)	(29,637		)	(203,000		)

Cash flows from financing activities
Capital contributions	40,713			47,149			203,660
Distributions	(63,759		)	(1,395		)	(157		)
Net cash provided by (used in) financing activities	(23,046		)	45,754			203,503

Net increase (decrease) in cash, cash equivalents and restricted cash	—			—			—
Cash, cash equivalents and restricted cash—beginning of period	—			—			—
Cash, cash equivalents and restricted cash—end of period	$	—		$	—		$	—

Balances per Balance Sheets:



	December 31,
	2019		2018
Cash and cash equivalents	$	—	$	—
Restricted cash	—		—
Total cash, cash equivalents and restricted cash	$	—	$	—

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

S-30

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

NOTES TO FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND NATURE OF OPERATIONS

CCP, a Delaware limited partnership, is a Houston based partnership formed by Cheniere. In November 2014, Cheniere contributed CCP to CCP GP as the general partner, and CCH as the limited partner, both of which are wholly owned subsidiaries of Cheniere. CCH was formed in September 2014 by Cheniere to hold its limited partner interest in us and its equity interests in CCL and CCP GP.

We own and operate a 23-mile natural gas supply pipeline (the “Corpus Christi Pipeline”) that interconnects the natural gas liquefaction and export facility at the Corpus Christi LNG terminal being operated and constructed by CCL (the “Liquefaction Facilities” and together with the Corpus Christi Pipeline, the “Liquefaction Project”) with several interstate and intrastate natural gas pipelines. CCL is currently operating two Trains and is constructing one additional Train for a total production capacity of approximately 15 mtpa of LNG.

CCL has entered into transportation precedent and other agreements to secure firm pipeline capacity with us, which supplement enabling agreements and long-term natural gas supply contracts CCL has executed with third parties to secure natural gas feedstock for the Liquefaction Project.

The development, construction, operation and maintenance of the Liquefaction Project is funded through contributions received from our parent, CCH.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our Financial Statements have been prepared in accordance with GAAP, which for regulated companies, includes specific accounting guidance for regulated operations.

Recent Accounting Standards

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and subsequent amendments thereto on January 1, 2019 using the optional transition approach to apply the standard at the beginning of the first quarter of 2019 with no retrospective adjustments to prior periods. This standard requires a lessee to recognize leases on its balance sheet by recording a lease 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. The adoption of the standard did not materially impact our Financial Statements. Upon adoption of the standard, we recorded right-of-use assets of $0.2 million in other non-current assets, net, and lease liabilities of $0.2 million in other non-current liabilities—affiliate.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance retrospectively eliminates the requirement to allocate the consolidated amount of current and deferred tax expense to entities that are not subject to income tax such as us, as further described under Income Taxes in this note. We early adopted this guidance effective December 31, 2019 and recorded a cumulative-effect adjustment to retained earnings of $2.0 million. The provision for income taxes, taxes payable and deferred income tax balances have been retrospectively removed from our Financial Statements.

Use of Estimates

The preparation of Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Financial Statements and the accompanying notes. Management evaluates its estimates and related assumptions regularly, including those related to property, plant and equipment and asset retirement obligations (“AROs”), as further discussed under the respective sections within this note. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.

S-31

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Revenue Recognition

We transport natural gas for CCL under a negotiated rate contract, as further discussed in Note 6—Related Party Transactions. See Note 5—Revenues from Contracts with Customers for further discussion of revenues.

Cash, Cash Equivalents and Restricted Cash

We did not have any cash and cash equivalents or restricted cash as of December 31, 2019. Our operations are funded through contributions from CCH.

Accounts Receivable

Accounts receivable is reported net of any allowances for doubtful accounts. We periodically review the collectability on our accounts receivable and recognize an allowance if there is probability of non-collection, based on historical write-off and customer-specific factors. We did not have an allowance on our accounts receivable as of December 31, 2019 and 2018.

Inventory

Materials and other inventory are recorded at the lower of cost and net realizable value and subsequently charged to expense when issued.

Operational Imbalances

Our balance sheets include natural gas imbalance receivables and payables resulting from differences in volumes received into the Corpus Christi Pipeline and volumes we delivered to our customers and vendors. Volumes owed to or by us that are subject to monthly cash settlement are valued according to the terms of the contract as of the balance sheet dates and reflect market index prices. Other volumes owed to or by us are valued in accordance with the contractual requirements of the respective pipelines’ tariff and are settled in-kind. Operational imbalances are reported in operational balancing assets and operational balancing liabilities in our balance sheets.

Accounting for Pipeline Activities

Generally, we begin capitalizing the costs associated with our pipeline once the individual project meets the following criteria: (1) regulatory approval has been received, (2) financing for the project is available and (3) management has committed to commence construction. Prior to meeting these criteria, most of the costs associated with a project are expensed as incurred. These costs primarily include professional fees associated with preliminary front-end engineering and design work, costs of securing necessary regulatory approvals and other preliminary investigation and development activities related to our pipeline.

Generally, costs that are capitalized prior to a project meeting the criteria otherwise necessary for capitalization include: land and lease option costs that are capitalized as property, plant and equipment and certain permits that are capitalized as other non-current assets. The costs of lease options are amortized over the life of the lease once obtained. If no land or lease is obtained, the costs are expensed.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Expenditures for construction activities, major renewals and betterments that extend the useful life of an asset are capitalized, while expenditures for maintenance and repairs (including those for planned major maintenance projects) to maintain property, plant and equipment in operating condition are generally expensed as incurred. We depreciate our property, plant and equipment using the straight-line depreciation method. Upon retirement or other disposition of property, plant and equipment, the cost and related accumulated depreciation are removed from the account, and the resulting gains or losses are recorded in accumulated depreciation. All of our long-lived assets are located in the United States.

S-32

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Allowance for Funds Used During Construction

Allowance for Funds Used During Construction (“AFUDC”) represents the cost of debt and equity funds used to finance our natural gas pipeline additions during construction. The rates used in the calculation of AFUDC are determined in accordance with guidelines established by the FERC. AFUDC is calculated based on the average cost of debt of CCH, which is contributed to us to fund the construction of the Corpus Christi Pipeline. AFUDC is included in “other income” on our Statements of Operations and was $0.3 million, $7.9 million and $15.6 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Asset Retirement Obligations

We have not recorded an ARO associated with the Corpus Christi Pipeline. We believe that it is not feasible to predict when the natural gas transportation services provided by the Corpus Christi Pipeline will no longer be utilized. In addition, our right-of-way agreements associated with the Corpus Christi Pipeline have no stipulated termination dates. We intend to operate the Corpus Christi Pipeline as long as supply and demand for natural gas exists in the United States and intend to maintain it regularly.

Income Taxes

Business Segment

Our pipeline business represents a single reportable segment. Our chief operating decision maker reviews the financial results of CCP in total when evaluating financial performance and for purposes of allocating resources.

NOTE 3—PROPERTY, PLANT AND EQUIPMENT

As of December 31, 2019 and 2018, property, plant and equipment, net consisted of the following (in thousands):



	December 31,
	2019			2018
Natural gas pipeline costs
Natural gas pipeline	$	383,668		$	369,653
Natural gas pipeline construction-in-process	11,746			9,022
Land	2,313			2,174
Accumulated depreciation	(15,491		)	(5,726		)
Total natural gas pipeline costs	382,236			375,123
Fixed assets
Fixed assets	2,396			2,017
Accumulated depreciation	(1,175		)	(482		)
Total fixed assets, net	1,221			1,535
Property, plant and equipment, net	$	383,457		$	376,658

Depreciation expense was $10.7 million, $6.1 million and $0.1 million during the years ended December 31, 2019, 2018 and 2017, respectively.

S-33

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Our natural gas pipeline cost is depreciated using the straight-line depreciation method with an estimated useful life of 40 years. Our fixed assets are recorded at cost and are depreciated on a straight-line method based on estimated lives of the individual assets or groups of assets.

NOTE 4—ACCRUED LIABILITIES

As of December 31, 2019 and 2018, accrued liabilities consisted of the following (in thousands):



	December 31,
	2019		2018
Pipeline costs	$	1,122	$	9,241
Other	3,329		2,792
Total accrued liabilities	$	4,451	$	12,033

NOTE 5—REVENUES FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue earned from contracts from customers during the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
Pipeline revenues—affiliate	$	61,875	$	1,559	$	—
Other revenues—affiliate	4,241		—		—
Total revenues	$	66,116	$	1,559	$	—

Pipeline revenues—affiliate

CCL has a transportation precedent agreement and a negotiated rate agreement with us to secure firm pipeline transportation capacity for the transportation of natural gas feedstock to the Liquefaction Facilities. These agreements have a primary term of 20 years from April 2019 and thereafter continue in effect from year to year until terminated by either party upon written notice of one year or the term of the agreements, whichever is less. CCL has continuous access to its firm transportation capacity during the contract term but has no ability to defer unused capacity to future periods. CCL pays fixed fees of approximately $78 million per year to reserve the right to transport natural gas up to maximum contractually specified levels, regardless of the quantities that CCL actually transports.

Because we are continuously available to provide transportation service on a daily basis with the same pattern of transfer, we have concluded that we provide a single performance obligation to CCL on a continuous basis over time. Because our rights to consideration correspond directly with the value of the incremental service performed, we have elected to recognize revenue when we have the right to invoice CCL for services performed to date, which results in a substantially straight-line recognition pattern over the term of the contract.

Transaction Price Allocated to Future Performance Obligations

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 December 31, 2019 and 2018:



	December 31, 2019			December 31, 2018
	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)
Pipeline revenues—affiliate	$	1.4	9	$	1.5	10


(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.

S-34

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

NOTES TO FINANCIAL STATEMENTS—CONTINUED

We omit from the table above all variable consideration expected to be recognized through our use of the right to invoice election.

NOTE 6—RELATED PARTY TRANSACTIONS

Below is a summary of our related party transactions as reported on our Statements of Operations for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019			2018		2017
Pipeline revenues—affiliate
Transportation Agreements	$	61,875		$	1,556	$	—
Operational Balancing Agreement	—			3		—
Total revenues—affiliate	61,875			1,559		—

Other revenues—affiliate
Transportation Agreements	4,241			—		—

Operating and maintenance expense (recovery)—affiliate
Services Agreements	7,189			3,114		70
Land Agreements	12			12		12
Operational Balancing Agreement	(8,007		)	6,189		—
Total operating and maintenance expense (recovery)—affiliate	(806		)	9,315		82

General and administrative expense—affiliate
Services Agreements	92			114		46

Other income—affiliate
Land Agreements	5			5		—

Services Agreements

We had $1.9 million and $1.7 million due to affiliates as of December 31, 2019 and 2018, respectively, under the agreements below.

Operation and Maintenance Agreement (“O&M Agreement”)

Management Services Agreement (“MSA”)

We have an MSA with Cheniere Energy Shared Services, Inc. (“Shared Services”), a wholly owned subsidiary of Cheniere, pursuant to which Shared Services manages our operations and business, excluding those matters provided for under the O&M Agreement. The services include, among other services, exercising the day-to-day management of our affairs and business, managing our regulatory matters, preparing status reports, providing contract administration services for all contracts associated with the Corpus Christi Pipeline and obtaining insurance. We are required to reimburse Shared Services for the aggregate of all costs and expenses incurred in the course of performing the services under the MSA.

S-35

CHENIERE CORPUS CHRISTI PIPELINE, L.P.

NOTES TO FINANCIAL STATEMENTS—CONTINUED

Land Agreements

Lease and Right of Way Easement Agreements

We have an agreement with CCL to lease from them a portion of the Liquefaction Facilities site for the purpose of the construction and operation of a meter station to measure the amount of natural gas delivered to the Liquefaction Facilities. The annual lease payment is $12 thousand. The initial term of the lease is 30 years, with options to renew for six 10-year extensions with similar terms as the initial term. In conjunction with this lease, we also entered into a pipeline right of way easement agreement with CCL granting us the right to construct, install and operate a natural gas pipeline on the Liquefaction Facilities site.

Access Road Use License Agreement

We have an agreement with CCL which grants us a limited license to enter the access road owned by CCL for access to the Liquefaction Facilities. The annual payment for this agreement is $5 thousand, and the terms of the agreement is five years from the effective date of February 2018.

Natural Gas Transportation Agreements

CCL has a transportation precedent agreement, a firm transportation service agreement and a negotiated rate agreement with us to secure firm pipeline transportation capacity for the transportation of natural gas feedstock to the Liquefaction Facilities. These agreements have a primary term of 20 years from April 2019, and thereafter continue in effect from year to year until terminated by either party upon written notice of one year or the term of the agreements, whichever is less. CCL pays fixed fees of approximately $78 million per year to reserve the right to transport natural gas up to maximum contractually specified levels, regardless of the quantities that CCL actually transports. Additionally, CCL reimburses us for the electric power cost that is incurred for our services, which is recorded in other revenues—affiliate. Prior to the commencement of the primary term of the agreement, CCL paid variable fees based on the volume of gas transported during the period. As of December 31, 2019 and 2018, we had $7.4 million and $1.1 million of accounts receivable—affiliate, respectively, under the transportation agreements.

Cheniere Corpus Christi Liquefaction Stage III, LLC, a wholly owned subsidiary of Cheniere, has a transportation precedent agreement with us to secure firm pipeline transportation capacity for the transportation of natural gas feedstock to the expansion of the Corpus Christi LNG terminal it is constructing adjacent to the Liquefaction Project. The agreement will have a primary term of 20 years from the service commencement date with right to extend the term for two successive five-year terms.

Contract for Sale and Purchase of Natural Gas

We have an agreement with CCL that allows us to sell and purchase natural gas with CCL. Natural gas sold under this agreement is recorded as revenues—affiliate.

Operational Balancing Agreement

We have an amended Operational Balancing Agreement (“OBA”) with CCL that provides for the resolution of any operational imbalances (1) during the term of the agreement on an in-kind basis and (2) upon termination of the agreement by cash-out at a rate equivalent to the average of the midpoint prices for East Texas—Houston Ship Channel pricing published in Platts’ “Gas Daily Price Guide - Final Daily Price Survey” for each day of the month following termination. As of December 31, 2019 and 2018, we had $1.8 million in operational balancing assets—affiliate and $6.2 million in operational balancing liabilities—affiliate, respectively, under the amended OBA.

State Tax Sharing Agreement

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CHENIERE CORPUS CHRISTI PIPELINE, L.P.

NOTES TO FINANCIAL STATEMENTS—CONTINUED

NOTE 7—COMMITMENTS AND CONTINGENCIES

Services Agreements

We have certain services agreements with affiliates. See Note 6—Related Party Transactions for information regarding such agreements.

State Tax Sharing Agreement

We have a state tax sharing agreement with Cheniere. See Note 6—Related Party Transactions for information regarding this agreement.

Obligations under Guarantee Contract

The subsidiaries of CCH, including us, have jointly and severally guaranteed the debt obligations of CCH. See Note 9—Guarantees and Collaterization for information regarding these guarantees.

Other Commitments

In the ordinary course of business, we have entered into certain multi-year licensing and service agreements, none of which are considered material to our financial position.

Environmental and Regulatory Matters

The Corpus Christi Pipeline is subject to extensive regulation under federal, state and local statutes, rules, regulations and laws. These laws require that we engage in consultations with appropriate federal and state agencies and that we obtain and maintain applicable permits and other authorizations. Failure to comply with such laws could result in legal proceedings, which may include substantial penalties. We believe that, based on currently known information, compliance with these laws and regulations will not have a material adverse effect on our results of operations, financial condition or cash flows.

Legal Proceedings

We may in the future be involved as a party to various legal proceedings, which are incidental to the ordinary course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual disposition of these matters. In the opinion of management, as of December 31, 2019, there were no pending legal matters that would reasonably be expected to have a material impact on our operating results, financial position or cash flows.

NOTE 8—SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental disclosure of cash flow information (in thousands):



	Year Ended December 31,
	2019		2018		2017
Non-cash capital contribution for conveyance of property, plant and equipment from affiliate	$	—	$	758	$	—

The balance in property, plant and equipment, net funded with accounts payable and accrued liabilities (including affiliate) was $0.7 million, $10.4 million and $28.5 million as of December 31, 2019, 2018 and 2017, respectively.

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CHENIERE CORPUS CHRISTI PIPELINE, L.P.

NOTES TO FINANCIAL STATEMENTS—CONTINUED

NOTE 9—GUARANTEES AND COLLATERIZATION

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Corpus Christi Pipeline GP, LLC

Financial Statements

As of December 31, 2019 and 2018

and for the years ended December 31, 2019, 2018 and 2017

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CORPUS CHRISTI PIPELINE GP, LLC

FINANCIAL STATEMENTS

DEFINITIONS

As used in these Financial Statements, the terms listed below have the following meanings:

Common Industry and Other Terms



GAAP		generally accepted accounting principles in the United States
LNG		liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
SEC		U.S. Securities and Exchange Commission
Train		an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of December 31, 2019 and the references to these entities used in these Financial Statements:

Unless the context requires otherwise, references to “CCP GP,” “the Company,” “we,” “us,” and “our” refer to Corpus Christi Pipeline GP, LLC.

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Independent Auditors’ Report

To the Member and Managers of

Corpus Christi Pipeline GP, LLC:

We have audited the accompanying financial statements of Corpus Christi Pipeline GP, LLC (the Company), which comprise the balance sheets as of December 31, 2019 and 2018, and the related statements of operations, member’s equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Auditors’ Responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Corpus Christi Pipeline GP, LLC as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in accordance with U.S. generally accepted accounting principles.

Emphasis of Matter

/s/ KPMG LLP

Houston, Texas