Annual report pursuant to Section 13 and 15(d)

Leases

v3.22.4
Leases
 12 Months Ended
Dec. 31, 2022
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 certain of our vessel charters and tug vessels, 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):
December 31,
Consolidated Balance Sheets Location 2022 2021
Right-of-use assets—Operating Operating lease assets $ 2,625  $ 2,102 
Right-of-use assets—Financing Property, plant and equipment, net of accumulated depreciation 511  50 
Total right-of-use assets $ 3,136  $ 2,152 
Current operating lease liabilities Current operating lease liabilities $ 616  $ 535 
Current finance lease liabilities Other current liabilities 28  2 
Non-current operating lease liabilities Operating lease liabilities 1,971  1,541 
Non-current finance lease liabilities Finance lease liabilities 494  57 
Total lease liabilities $ 3,109  $ 2,135 

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 Year Ended December 31,
2022 2021 2020
Operating lease cost (a) Operating costs and expenses (1) $ 828  $ 621  $ 432 
Finance lease cost:
Amortization of right-of-use assets Depreciation and amortization expense 12  3  2 
Interest on lease liabilities Interest expense, net of capitalized interest 14  9  7 
Total lease cost $ 854  $ 633  $ 441 
(a) Included in operating lease cost:
Short-term lease costs $ 122  $ 139  $ 93 
Variable lease costs 18  21  16 
(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 December 31, 2022 are as follows (in millions): 
Years Ending December 31, Operating Leases Finance Leases
2023 $ 690  $ 63 
2024 644  66 
2025 505  71 
2026 372  75 
2027 275  77 
Thereafter 492  427 
Total lease payments (1) 2,978  779 
Less: Interest (391) (257)
Present value of lease liabilities $ 2,587  $ 522 
(1)Does not include approximately $3.3 billion of legally binding minimum payments primarily for vessel charters contracted for as of December 31, 2022, which will commence in future periods with fixed minimum lease terms of up to 15 years.
The following table shows the weighted-average remaining lease term and the weighted-average discount rate for our operating leases and finance leases:
December 31, 2022 December 31, 2021
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted-average remaining lease term (in years) 5.9 10.6 5.6 16.7
Weighted-average discount rate (1) 4.2% 7.8% 3.6% 16.2%
(1)The weighted average discount rate is impacted by certain finance leases that 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):
Year Ended December 31,
2022 2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 713  $ 483  $ 309 
Operating cash flows from finance leases 14  10  10 
Right-of-use assets obtained in exchange for operating lease liabilities 1,220  1,736  615 
Right-of-use assets obtained in exchange for finance lease liabilities (1) 473  —  — 
(1)Includes $88 million reclassified from operating leases to finance leases during the year ended December 31, 2022, as a result of modifications of the underlying vessel charters.

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. The following table shows the sublease income recognized in other revenues on our Consolidated Statements of Operations (in millions):
Year Ended December 31,
2022 2021 2020
Fixed income $ 371  $ 72  $ 68 
Variable income 79  37  27 
Total sublease income $ 450  $ 109  $ 95 

Future annual minimum sublease payments to be received from LNG vessel subcharters as of December 31, 2022 are as follows (in millions): 
Years Ending December 31, LNG Vessel Subcharters
2023 $ 165 
2024 18 
2025 — 
2026 — 
2027 — 
Thereafter — 
Total lease payments 183