Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.21.2
Leases
 9 Months Ended
Sep. 30, 2021
Leases [Abstract]  
Leases LEASES
Our leased assets consist primarily of LNG vessel time charters (“vessel charters”) and additionally include tug vessels, office space and facilities and land sites. All of our leases are classified as operating leases except for our tug vessels supporting the Corpus Christi LNG Terminal, which are classified as finance leases.

The following table shows the classification and location of our right-of-use assets and lease liabilities on our Consolidated Balance Sheets (in millions):
September 30, December 31,
Consolidated Balance Sheets Location 2021 2020
Right-of-use assets—Operating Operating lease assets $ 2,064  $ 759 
Right-of-use assets—Financing Property, plant and equipment, net of accumulated depreciation 51  53 
Total right-of-use assets $ 2,115  $ 812 
Current operating lease liabilities Current operating lease liabilities $ 458  $ 161 
Current finance lease liabilities Other current liabilities 2  2 
Non-current operating lease liabilities Operating lease liabilities 1,590  597 
Non-current finance lease liabilities Finance lease liabilities 57  57 
Total lease liabilities $ 2,107  $ 817 

The following table shows the classification and location of our lease costs on our Consolidated Statements of Operations (in millions):
Consolidated Statements of Operations Location Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Operating lease cost (a) Operating costs and expenses (1) $ 145  $ 77  $ 441  $ 316 
Finance lease cost:
Amortization of right-of-use assets Depreciation and amortization expense —  —  2  2 
Interest on lease liabilities Interest expense, net of capitalized interest 2  2  7  7 
Total lease cost $ 147  $ 79  $ 450  $ 325 
(a) Included in operating lease cost:
Short-term lease costs $ 22  $ 9  $ 103  $ 60 
Variable lease costs 7  3  20  12 
(1)Presented in cost of sales, operating and maintenance expense or selling, general and administrative expense consistent with the nature of the asset under lease.
Future annual minimum lease payments for operating and finance leases as of September 30, 2021 are as follows (in millions): 
Years Ending December 31, Operating Leases (1) Finance Leases
2021 $ 139  $ 3 
2022 515  10 
2023 479  10 
2024 433  10 
2025 243  10 
Thereafter 510  127 
Total lease payments 2,319  170 
Less: Interest (271) (111)
Present value of lease liabilities $ 2,048  $ 59 
(1)Does not include $758 million of legally binding minimum lease payments primarily for vessel charters which were executed as of September 30, 2021 but will commence in future periods primarily in the next year and have fixed minimum lease terms of up to seven years.

The following table shows the weighted-average remaining lease term and the weighted-average discount rate for our operating leases and finance leases:
September 30, 2021 December 31, 2020
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted-average remaining lease term (in years) 5.9 16.9 8.2 17.7
Weighted-average discount rate (1) 3.6% 16.2% 5.4% 16.2%
(1)The finance leases commenced prior to the adoption of the current leasing standard under GAAP. In accordance with previous accounting guidance, the implied rate is based on the fair value of the underlying assets.

The following table includes other quantitative information for our operating and finance leases (in millions):
Nine Months Ended September 30,
2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases $ 331  $ 226 
Operating cash flows used in finance leases 7  8 
Right-of-use assets obtained in exchange for operating lease liabilities 1,575  412 

LNG Vessel Subcharters

From time to time, we sublease certain LNG vessels under charter to third parties while retaining our existing obligation to the original lessor. As of both September 30, 2021 and December 31, 2020, we had no future minimum sublease payments to be received from LNG vessel subcharters. The following table shows the sublease income recognized in other revenues on our Consolidated Statements of Operations (in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Fixed income $ 17  $ 9  $ 28  $ 61 
Variable income 15  1  21  24 
Total sublease income $ 32  $ 10  $ 49  $ 85