lng-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-16383

CHENIERE ENERGY, INC.

(Exact name of registrant as specified in its charter)


Delaware			95-4352386
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

700 Milam Street, Suite 1900

Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

(713) 375-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $ 0.003 par value	LNG	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 29, 2021, the issuer had 253,588,453 shares of Common Stock outstanding.

CHENIERE ENERGY, INC.

TABLE OF CONTENTS






















	Definitions	1
Part I. Financial Information
Item 1.	Consolidated Financial Statements	3
	Consolidated Statements of Operations	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Stockholders’ Equity	5
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
	Note 1—Nature of Operations and Basis of Presentation	8
	Note 2—Restricted Cash	9
	Note 3—Accounts and Other Receivables, Net of Current Expected Credit Losses	9
	Note 4—Inventory	10
	Note 5—Property, Plant and Equipment, Net of Accumulated Depreciation	10
	Note 6—Derivative Instruments	11

	Note 7 —Non-Controlling Interest and Variable Interest Entity	16
	Note 8 —Accrued Liabilities	17
	Note 9 —Debt	18
	Note 1 0 —Leases	22
	Note 1 1 —Revenues from Contracts with Customers	24
	Note 1 2 —Related Party Transactions	25
	Note 1 3 —Income Taxes	27
	Note 1 4 —Share-Based Compensation	27
	Note 1 5 —Net Income per Share Attributable to Common Stockholders	28

	Note 1 6 —Stockholders’ Equity	28
	Note 1 7 —Customer Concentration	29
	Note 1 8 —Supplemental Cash Flow Information	29

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52

Item 4.	Controls and Procedures	53

Part II. Other Information
Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 6.	Exhibits	55

	Signatures	56

DEFINITIONS

As used in this quarterly report, the terms listed below have the following meanings:

Common Industry and Other Terms


Bcf						billion cubic feet
Bcf/d						billion cubic feet per day
Bcf/yr						billion cubic feet per year
Bcfe						billion cubic feet equivalent
DOE						U.S. Department of Energy
EPC						engineering, procurement and construction
FERC						Federal Energy Regulatory Commission
FTA countries						countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
GAAP						generally accepted accounting principles in the United States
Henry Hub						the final settlement price (in USD per MMBtu) for the New York Mercantile Exchange’s Henry Hub natural gas futures contract for the month in which a relevant cargo’s delivery window is scheduled to begin
IPM						integrated production marketing
LIBOR						London Interbank Offered Rate
LNG						liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
MMBtu						million British thermal units; one British thermal unit measures the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit
mtpa						million tonnes per annum

non-FTA countries						countries with which the United States does not have a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted
SEC						U.S. Securities and Exchange Commission
SPA						LNG sale and purchase agreement
TBtu						trillion British thermal units; one British thermal unit measures the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit
Train						an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
TUA						terminal use agreement

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of September 30, 2021, including our ownership of certain subsidiaries, and the references to these entities used in this quarterly report:

Unless the context requires otherwise, references to “Cheniere,” the “Company,” “we,” “us” and “our” refer to Cheniere Energy, Inc. and its consolidated subsidiaries, including our publicly traded subsidiary, Cheniere Partners.

Unless the context requires otherwise, references to the “CCH Group” refer to CCH, CCL and CCP, collectively.

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

CHENIERE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
LNG revenues	$	3,078	$	1,373	$	8,990	$	6,236
Regasification revenues	68		67		202		202
Other revenues	54		20		115		133

Total revenues	3,200		1,460		9,307		6,571

Operating costs and expenses
Cost of sales (excluding items shown separately below)	4,868		768		8,408		2,295

Operating and maintenance expense	350		317		1,057		988
Development expense	2		—		5		5
Selling, general and administrative expense	70		70		224		224
Depreciation and amortization expense	259		233		753		699

Impairment expense and loss on disposal of assets	1		—		—		5


Total operating costs and expenses	5,550		1,388		10,447		4,216

Income (loss) from operations	(2,350)		72		(1,140)		2,355

Other expense
Interest expense, net of capitalized interest	(364)		(355)		(1,088)		(1,174)
Loss on modification or extinguishment of debt	(36)		(171)		(95)		(215)
Interest rate derivative loss, net	(2)		—		(3)		(233)
Other expense, net	(24)		(129)		(14)		(115)
Total other expense	(426)		(655)		(1,200)		(1,737)

Income (loss) before income taxes and non-controlling interest	(2,776)		(583)		(2,340)		618
Less: income tax provision (benefit)	(1,860)		(75)		(1,864)		119
Net income (loss)	(916)		(508)		(476)		499
Less: net income (loss) attributable to non-controlling interest	168		(45)		544		390
Net income (loss) attributable to common stockholders	$	(1,084)	$	(463)	$	(1,020)	$	109

Net income (loss) per share attributable to common stockholders—basic and diluted	$	(4.27)	$	(1.84)	$	(4.03)	$	0.43


Weighted average number of common shares outstanding—basic	253.6		252.2		253.3		252.5
Weighted average number of common shares outstanding—diluted	253.6		252.2		253.3		253.2

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

CHENIERE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (1)

(in millions, except share data)



	September 30,		December 31,
	2021		2020
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	2,203	$	1,628
Restricted cash	419		449
Accounts and other receivables, net of current expected credit losses	983		647

Inventory	471		292
Current derivative assets	266		32
Margin deposits	336		25
Other current assets	185		96
Total current assets	4,863		3,169


Property, plant and equipment, net of accumulated depreciation	30,318		30,421
Operating lease assets	2,064		759

Derivative assets	71		376
Goodwill	77		77
Deferred tax assets	2,361		489
Other non-current assets, net	425		406
Total assets	$	40,179	$	35,697

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	73	$	35
Accrued liabilities	1,787		1,175

Current debt, net of discount and debt issuance costs	1,047		372
Deferred revenue	187		138
Current operating lease liabilities	458		161
Current derivative liabilities	1,979		313
Other current liabilities	129		2
Total current liabilities	5,660		2,196

Long-term debt, net of premium, discount and debt issuance costs	29,481		30,471
Operating lease liabilities	1,590		597
Finance lease liabilities	57		57

Derivative liabilities	2,158		151
Other non-current liabilities	20		7



Stockholders’ equity
Preferred stock, $0.0001 par value, 5.0 million shares authorized, none issued	—		—
Common stock, $0.003 par value, 480.0 million shares authorized; 275.1 million shares and 273.1 million shares issued at September 30, 2021 and December 31, 2020, respectively	1		1



Treasury stock: 21.6 million shares and 20.8 million shares at September 30, 2021 and December 31, 2020, respectively, at cost	(924)		(872)
Additional paid-in-capital	4,364		4,273
Accumulated deficit	(4,698)		(3,593)
Total stockholders' deficit	(1,257)		(191)
Non-controlling interest	2,470		2,409
Total equity	1,213		2,218
Total liabilities and stockholders’ equity	$	40,179	$	35,697

(1)Amounts presented include balances held by our consolidated variable interest entity (“VIE”), Cheniere Partners, as further discussed in Note 7 — Non-controlling Interest and Variable Interest Entity. As of September 30, 2021, total assets and liabilities of Cheniere Partners, which are included in our Consolidated Balance Sheets, were $19.6 billion and $19.3 billion, respectively, including $1.7 billion of cash and cash equivalents and $0.1 billion of restricted cash.

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

CHENIERE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions)

(unaudited)


Three and Nine Months Ended September 30, 2021
	Total Stockholders’ Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Deficit		Non-controlling Interest		Total Equity
	Shares	Par Value Amount		Shares	Amount























Balance at December 31, 2020	252.3	$	1	20.8	$	(872)	$	4,273	$	(3,593)	$	2,409	$	2,218
Vesting of restricted stock units and performance stock units	1.8	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		33		—		—		33
Issued shares withheld from employees related to share-based compensation, at cost	(0.6)	—		0.6	(42)		—		—		—		(42)

Net income attributable to non-controlling interest	—	—		—	—		—		—		178		178
Distributions to non-controlling interest	—	—		—	—		—		—		(160)		(160)
Net income	—	—		—	—		—		393		—		393
Balance at March 31, 2021	253.5	1		21.4	(914)		4,306		(3,200)		2,427		2,620
Vesting of restricted stock units and performance stock units	0.1	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		31		—		—		31
Issued shares withheld from employees related to share-based compensation, at cost	—	—		—	(1)		—		—		—		(1)

Net income attributable to non-controlling interest	—	—		—	—		—		—		198		198

Distributions to non-controlling interest	—	—		—	—		—		—		(162)		(162)
Net loss	—	—		—	—		—		(329)		—		(329)
Balance at June 30, 2021	253.6	1		21.4	(915)		4,337		(3,529)		2,463		2,357
Vesting of restricted stock units and performance stock units	0.1	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		28		—		—		28
Issued shares withheld from employees related to share-based compensation, at cost	(0.1)	—		0.1	(3)		(1)		—		—		(4)
Shares repurchased, at cost	(0.1)	—		0.1	(6)		—		—		—		(6)
Net income attributable to non-controlling interest	—	—		—	—		—		—		168		168

Distributions to non-controlling interest	—	—		—	—		—		—		(161)		(161)
Dividends declared ($0.33 per common share)	—	—		—	—		—		(85)		—		(85)
Net loss	—	—		—	—		—		(1,084)		—		(1,084)
Balance at September 30, 2021	253.5	$	1	21.6	$	(924)	$	4,364	$	(4,698)	$	2,470	$	1,213

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

CHENIERE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED

(in millions)

(unaudited)


Three and Nine Months Ended September 30, 2020
	Total Stockholders’ Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Deficit		Non-controlling Interest		Total Equity
	Shares	Par Value Amount		Shares	Amount
Balance at December 31, 2019	253.6	$	1	17.1	$	(674)	$	4,167	$	(3,508)	$	2,449	$	2,435
Vesting of restricted stock units and performance stock units	2.1	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		29		—		—		29
Issued shares withheld from employees related to share-based compensation, at cost	(0.7)	—		0.7	(39)		—		—		—		(39)
Shares repurchased, at cost	(2.9)	—		2.9	(155)		—		—		—		(155)
Net income attributable to non-controlling interest	—	—		—	—		—		—		228		228
Distributions to non-controlling interest	—	—		—	—		—		—		(154)		(154)
Net income	—	—		—	—		—		375		—		375
Balance at March 31, 2020	252.1	1		20.7	(868)		4,196		(3,133)		2,523		2,719
Vesting of restricted stock units and performance stock units	0.1	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		31		—		—		31
Issued shares withheld from employees related to share-based compensation, at cost	—	—		—	(2)		—		—		—		(2)

Net income attributable to non-controlling interest	—	—		—	—		—		—		207		207

Distributions to non-controlling interest	—	—		—	—		—		—		(156)		(156)
Net income	—	—		—	—		—		197		—		197
Balance at June 30, 2020	252.2	1		20.7	(870)		4,227		(2,936)		2,574		2,996
Vesting of restricted stock units and performance stock units	0.1	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—