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Financial Instruments (Tables)
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12 Months Ended |
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Dec. 31, 2012
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| Financial Instruments [Abstract] |
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| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
The following table (in thousands) shows the fair value of our derivative assets and liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2012 and 2011, which are classified as other current assets, other current liabilities and other non-current liabilities in our Consolidated Balance Sheets.
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Fair Value Measurements as of |
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December 31, 2012 |
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December 31, 2011 |
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Quoted Prices in Active Markets
(Level 1)
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Significant Other Observable Inputs (Level 2) |
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Significant Unobservable Inputs (Level 3) |
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Total |
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Quoted Prices in Active Markets
(Level 1)
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Significant Other Observable Inputs (Level 2) |
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Significant Unobservable Inputs (Level 3) |
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Total |
LNG Inventory Derivatives asset |
$ |
— |
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$ |
237 |
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$ |
— |
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$ |
237 |
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$ |
— |
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$ |
1,951 |
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$ |
— |
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$ |
1,951 |
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Fuel Derivatives liability |
— |
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98 |
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— |
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98 |
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— |
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1,415 |
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— |
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1,415 |
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Interest Rate Derivatives liability |
— |
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26,424 |
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— |
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26,424 |
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— |
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— |
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— |
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— |
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| Fair Value, by Balance Sheet Grouping |
Other Financial Instruments (in thousands):
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December 31, 2012 |
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December 31, 2011 |
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Carrying
Amount
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Estimated
Fair Value
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Carrying
Amount
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Estimated
Fair Value
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2016 Notes, net of discount (1) |
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$ |
1,647,113 |
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$ |
1,824,177 |
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$ |
1,642,418 |
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$ |
1,650,630 |
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2020 Notes (1) |
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420,000 |
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437,850 |
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— |
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— |
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Liquefaction Credit Facility (2) |
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100,000 |
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100,000 |
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— |
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— |
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2013 Notes (1) |
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— |
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— |
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550,000 |
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555,500 |
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Convertible Senior Unsecured Notes, net of discount (1) |
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— |
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— |
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194,724 |
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186,740 |
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2007 Term Loan (3) |
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— |
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— |
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298,000 |
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292,728 |
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2008 Loans (4) |
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— |
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— |
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282,293 |
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282,293 |
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(1) |
The Level 2 estimated fair value was based on quotations obtained from broker-dealers who make markets in these and similar instruments based on the closing trading prices on December 31, 2012 and 2011, as applicable.
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(2) |
The Level 3 estimated fair value of the Liquefaction Credit Facility as of December 31, 2012 was determined to be the carrying amount due to our ability to call this debt at anytime without penalty.
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(3) |
The 2007 Term Loan was closely held by few holders, and purchases and sales were infrequent and were conducted on a bilateral basis without price discovery by us. This loan was not rated and had unique covenants and collateral packages such that comparisons to other instruments were imprecise. Nonetheless, we provided an estimate of the fair value of this loan as of December 31, 2011 based on an index of the yield to maturity of CCC rated debt of other companies in the energy sector, resulting in Level 3 categorization. In January 2012, the 2007 Term Loan was paid in full.
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(4) |
The Level 3 estimated fair value of the 2008 Loans as of December 31, 2011 was determined to be the same as the carrying amount due to our ability to call the debt (other than the debt held by Scorpion) at anytime without penalty or a make-whole payment for an early redemption. In April 2012, Scorpion exchanged all $8.4 million of its loan for 1.7 million shares of Cheniere common stock and $1.4 million cash. In June 2012, the 2008 Loans were paid in full and the credit agreement and related agreements were terminated.
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The following table (in thousands) shows the fair value and location of our LNG Inventory Derivatives and Fuel Derivatives on our Consolidated Balance Sheets:
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Fair Value Measurements as of |
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Balance Sheet Location |
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December 31, 2012 |
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December 31, 2011 |
LNG Inventory Derivatives asset |
Prepaid expenses and other |
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$ |
237 |
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$ |
1,951 |
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Fuel Derivatives liability |
Other current liabilities |
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98 |
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1,415 |
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| Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location |
The following table (in thousands) shows the changes in the fair value and settlements of our Fuel Derivatives recorded in derivative gain (loss) on our Consolidated Statements of Operations during the years ended December 31, 2012, 2011 and 2010:
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Year Ended December 31, |
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2012 |
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2011 |
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2010 |
Fuel Derivatives gain (loss) |
$ |
(622 |
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$ |
(2,251 |
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$ |
461 |
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The following table (in thousands) shows the changes in the fair value and settlements of our LNG Inventory Derivatives recorded in marketing and trading revenues (losses) on our Consolidated Statements of Operations during the years ended December 31, 2012, 2011 and 2010:
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Year Ended December 31, |
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2012 |
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2011 |
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2010 |
LNG Inventory Derivatives gain |
$ |
995 |
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$ |
2,475 |
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$ |
2,265 |
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| Schedule of Notional Amounts of Outstanding Derivative Positions |
At December 31, 2012, Sabine Pass Liquefaction had the following Interest Rate Derivatives outstanding that converted $20.0 million of the Liquefaction Credit Facility from a variable to a fixed interest rate. Sabine Pass Liquefaction pays a fixed interest rate on the swap and in exchange receives a variable interest rate based on the one-month LIBOR.
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Initial Notional Amount |
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Maximum Notional Amount |
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Effective Date |
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Maturity Date |
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Weighted Average Fixed Interest Rate Paid |
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Variable Interest Rate Received |
Interest Rate Derivatives - Designated |
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$16.1 million |
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$2.3 billion |
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August 14, 2012 |
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July 31, 2019 |
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1.98% |
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One-month LIBOR |
Interest Rate Derivatives - De-designated |
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$3.9 million |
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$575.3 million |
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August 14, 2012 |
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July 31, 2019 |
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1.98% |
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One-month LIBOR |
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| Schedule of Interest Rate Derivatives |
The following table (in thousands) shows the fair value of our interest rate swaps:
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Fair Value Measurements as of |
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Balance Sheet Location |
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December 31, 2012 |
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December 31, 2011 |
Interest Rate Derivatives - Designated |
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Non-current derivative liabilities |
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$ |
21,290 |
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$ |
— |
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Interest Rate Derivatives - De-designated |
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Non-current derivative liabilities |
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5,134 |
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— |
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| Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) |
The following table (in thousands) shows our Interest Rate Derivatives market adjustments recorded during the year ended December 31, 2012:
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Gain (Loss) in Other Comprehensive Income |
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Gain (Loss) Reclassified from Accumulated OCI into Interest Expense (Effective Portion) |
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Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) |
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2012 |
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2011 |
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2012 |
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2011 |
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2012 |
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2011 |
Interest Rate Derivatives - Designated |
$ |
(21,290 |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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Interest Rate Derivatives - De-designated |
(5,814 |
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— |
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— |
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— |
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— |
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— |
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Interest Rate Derivatives - Settlements |
(136 |
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— |
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— |
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— |
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— |
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— |
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| Schedule of Financial Instruments |
The Company's commodity and interest rate derivatives are presented on a net basis on our Consolidated Balance Sheets as described above. The following table (in thousands) shows the fair value of our derivatives outstanding on a gross basis:
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December 31, 2012 |
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December 31, 2011 |
Commodity Derivatives: |
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Assets |
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$ |
613 |
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$ |
2,310 |
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Liabilities |
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474 |
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1,774 |
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Interest Rate Derivatives: |
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Assets - designated |
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$ |
17,512 |
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$ |
— |
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Assets - de-designated |
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4,283 |
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— |
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Liabilities - designated |
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38,729 |
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— |
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Liabilities - de-designated |
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9,491 |
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— |
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