lng-20220930

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, 2022

☐ 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 31, 2022, the issuer had 248,659,406 shares of Common Stock outstanding.

CHENIERE ENERGY, INC.

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	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 (Deficit)	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 Cas h and Cash Equivalents	9
	Note 3—Trade and Other Receivables, Net of Current Expected Credit Losses	10
	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	17
	Note 8—Accrued Liabilities	17
	Note 9—Debt	18
	Note 10—Leases	21
	Note 11—Revenues	23
	Note 12—Related Party Transactions	25
	Note 13—Income Taxes	26

	Note 14—Net Loss per Share Attributable to Common Stockholders	27

	Note 15—Stock Repurchase Programs	27
	Note 16—Customer Concentration	28
	Note 17—Supplemental Cash Flow Information	28

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43

Item 4.	Controls and Procedures	44

Part II. Other Information
Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 6.	Exhibits	47

	Signatures	48

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DEFINITIONS

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

Common Industry and Other Terms


ASU						Accounting Standards Update
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
FASB						Financial Accounting Standards Board
FERC						Federal Energy Regulatory Commission
FID						final investment decision
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 agreements						integrated production marketing agreements in which the gas producer sells to us gas on a global LNG index price, less a fixed liquefaction fee, shipping and other costs
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
SOFR						Secured Overnight Financing Rate
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

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Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of September 30, 2022, 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, CQP.

In June 2022, as part of the internal restructuring of Cheniere’s subsidiaries, Cheniere contributed its equity interest in Corpus Christi Liquefaction Stage III, LLC (“CCL Stage III”), formerly a wholly owned direct subsidiary of Cheniere, to CCH, and CCL Stage III was subsequently merged with and into CCL, the surviving entity of the merger and a wholly owned subsidiary of CCH.

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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,
	2022		2021		2022		2021
Revenues
LNG revenues	$	8,236	$	3,078	$	23,449	$	8,990
Regasification revenues	455		68		591		202
Other revenues	161		54		303		115

Total revenues	8,852		3,200		24,343		9,307

Operating costs and expenses
Cost of sales (excluding items shown separately below)	11,073		4,868		24,161		8,408

Operating and maintenance expense	419		350		1,227		1,057
Development expense	4		2		12		5
Selling, general and administrative expense	92		70		265		224
Depreciation and amortization expense	280		259		827		753


Other	—		1		3		—

Total operating costs and expenses	11,868		5,550		26,495		10,447

Loss from operations	(3,016)		(2,350)		(2,152)		(1,140)

Other income (expense)
Interest expense, net of capitalized interest	(354)		(364)		(1,060)		(1,088)
Gain (loss) on modification or extinguishment of debt	3		(36)		(43)		(95)
Derivative gain (loss), net	—		(2)		2		(3)
Other expense, net	(29)		(24)		(21)		(14)
Total other expense	(380)		(426)		(1,122)		(1,200)

Loss before income taxes and non-controlling interest	(3,396)		(2,776)		(3,274)		(2,340)
Less: income tax benefit	(752)		(1,860)		(762)		(1,864)
Net loss	(2,644)		(916)		(2,512)		(476)
Less: net income (loss) attributable to non-controlling interest	(259)		168		(3)		544
Net loss attributable to common stockholders	$	(2,385)	$	(1,084)	$	(2,509)	$	(1,020)

Net loss per share attributable to common stockholders—basic and diluted (1)	$	(9.54)	$	(4.27)	$	(9.94)	$	(4.03)


Weighted average number of common shares outstanding—basic	249.9		253.6		252.5		253.3
Weighted average number of common shares outstanding—diluted	249.9		253.6		252.5		253.3

(1)Earnings per share in the table may not recalculate exactly due to rounding because it is calculated based on whole numbers, not the rounded numbers presented.

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

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CHENIERE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (1)

(in millions, except share data)



	September 30,		December 31,
	2022		2021
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	2,504	$	1,404
Restricted cash and cash equivalents	834		413
Trade and other receivables, net of current expected credit losses	1,834		1,506

Inventory	1,129		706
Current derivative assets	131		55
Margin deposits	267		765
Contract assets	392		5
Other current assets	115		202
Total current assets	7,206		5,056


Property, plant and equipment, net of accumulated depreciation	30,904		30,288
Operating lease assets	2,795		2,102

Derivative assets	46		69
Goodwill	77		77
Deferred tax assets	2,100		1,204
Other non-current assets, net	514		462
Total assets	$	43,642	$	39,258

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	405	$	155
Accrued liabilities	3,108		2,299

Current debt, net of discount and debt issuance costs	1,717		366
Deferred revenue	211		155
Current operating lease liabilities	669		535
Current derivative liabilities	3,215		1,089
Other current liabilities	50		94
Total current liabilities	9,375		4,693

Long-term debt, net of premium, discount and debt issuance costs	25,325		29,449
Operating lease liabilities	2,082		1,541
Finance lease liabilities	75		57

Derivative liabilities	10,954		3,501
Other non-current liabilities	161		50



Stockholders’ deficit
Preferred stock: $0.0001 par value, 5.0 million shares authorized, none issued	—		—
Common stock: $0.003 par value, 480.0 million shares authorized; 276.7 million shares and 275.2 million shares issued at September 30, 2022 and December 31, 2021, respectively	1		1



Treasury stock: 26.8 million shares and 21.6 million shares at September 30, 2022 and December 31, 2021, respectively, at cost	(1,609)		(928)
Additional paid-in-capital	4,309		4,377
Accumulated deficit	(8,880)		(6,021)
Total Cheniere stockholders’ deficit	(6,179)		(2,571)
Non-controlling interest	1,849		2,538
Total stockholders’ deficit	(4,330)		(33)
Total liabilities and stockholders’ deficit	$	43,642	$	39,258

(1)Amounts presented include balances held by our consolidated variable interest entity (“VIE”), CQP, as further discussed in Note 7—Non-controlling Interest and Variable Interest Entity. As of September 30, 2022, total assets and liabilities of CQP were $19.9 billion and $24.3 billion, respectively, including $1.0 billion of cash and cash equivalents and $0.2 billion of restricted cash and cash equivalents.

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

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CHENIERE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in millions)

(unaudited)


Three and Nine Months Ended September 30, 2022
	Total Stockholders’ Deficit
	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Deficit		Non-controlling Interest		Total Deficit
	Shares	Par Value Amount		Shares	Amount






















Balance at December 31, 2021	253.6	$	1	21.6	$	(928)	$	4,377	$	(6,021)	$	2,538	$	(33)
Vesting of share-based compensation awards	1.3	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		38		—		—		38
Issued shares withheld from employees related to share-based compensation, at cost	(0.3)	—		0.3	(35)		(18)		—		—		(53)
Shares repurchased, at cost	(0.2)	—		0.2	(25)		—		—		—		(25)
Adoption of ASU 2020-06, net of tax (see Note 1)	—	—		—	—		(153)		4		—		(149)
Net income attributable to non-controlling interest	—	—		—	—		—		—		84		84
Distributions to non-controlling interest	—	—		—	—		—		—		(171)		(171)
Dividends declared and paid ($0.33 per common share)	—	—		—	—		—		(85)		—		(85)
Net loss	—	—		—	—		—		(865)		—		(865)
Balance at March 31, 2022	254.4	1		22.1	(988)		4,244		(6,967)		2,451		(1,259)
Vesting of share-based compensation awards	0.1	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		34		—		—		34
Issued shares withheld from employees related to share-based compensation, at cost	—	—		—	(1)		(1)		—		—		(2)
Shares repurchased, at cost	(4.1)	—		4.1	(540)		—		—		—		(540)
Net income attributable to non-controlling interest	—	—		—	—		—		—		172		172
Distributions to non-controlling interest	—	—		—	—		—		—		(256)		(256)
Dividends declared and paid ($0.33 per common share)	—	—		—	—		—		(85)		—		(85)
Net income	—	—		—	—		—		741		—		741
Balance at June 30, 2022	250.4	1		26.2	(1,529)		4,277		(6,311)		2,367		(1,195)
Vesting of share-based compensation awards	0.1	—		—	—		—		—		—		—
Share-based compensation	—	—		—	—		34		—		—		34
Issued shares withheld from employees related to share-based compensation, at cost	—	—		—	(5)		(2)		—		—		(7)
Shares repurchased, at cost	(0.6)	—		0.6	(75)		—		—		—		(75)

Net loss attributable to non-controlling interest	—	—		—	—		—		—		(259)		(259)

Distributions to non-controlling interest	—	—		—	—		—		—		(259)		(259)
Dividends declared and paid ($0.33 per common share)	—	—		—	—		—		(81)		—		(81)
Dividends declared and accrued ($0.395 per common share)	—	—		—	—		—		(103)		—		(103)
Net loss	—	—		—	—		—		(2,385)		—		(2,385)
Balance at September 30, 2022	249.9	$	1	26.8	$	(1,609)	$	4,309	$	(8,880)	$	1,849	$	(4,330)

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

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CHENIERE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)—CONTINUED

(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 share-based compensation awards	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 share-based compensation awards	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)