| Business Segment Information |
BUSINESS SEGMENT INFORMATION
We have two reportable segments: LNG terminal segment and LNG and natural gas marketing segment. We determine our reportable segments by identifying each segment that engaged in business activities from which it may earn revenues and incur expenses, had operating results regularly reviewed by the entities’ chief operating decision maker for purposes of resource allocation and performance assessment and had discrete financial information. Revenues from external customers that were derived from customers outside of the United States were $224.3 million and $255.7 million for the three and nine months ended September 30, 2016, respectively. We attribute revenues from external customers to the country in which the party to the applicable agreement has its principal place of business. Substantially all of our long-lived assets are located in the United States.
Our LNG terminal segment consists of the Sabine Pass and Corpus Christi LNG terminals. We own and operate the Sabine Pass LNG terminal located in Cameron Parish, Louisiana, on the Sabine-Neches Waterway less than four miles from the Gulf Coast through our ownership interest in and management agreements with Cheniere Partners. We own 100% of the general partner interest in Cheniere Partners and 80.1% of the common shares of Cheniere Holdings, which owns a 55.9% limited partner interest in Cheniere Partners. We are also developing and constructing a second natural gas liquefaction and export facility at the Corpus Christi LNG terminal near Corpus Christi, Texas.
Our LNG and natural gas marketing segment consists of LNG and natural gas marketing activities by Cheniere Marketing. Cheniere Marketing is developing a portfolio of long-term, short-term and spot LNG SPAs with professional staff based in the United States, United Kingdom, Singapore and Chile.
The following table (in thousands) summarizes revenues (losses) and income (loss) from operations for each of our reporting segments:
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Segments |
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LNG Terminal |
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LNG & Natural Gas Marketing |
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Corporate and Other (1) |
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Total
Consolidation
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Three Months Ended September 30, 2016 |
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Revenues (losses) from external customers |
$ |
314,917 |
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$ |
179,188 |
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$ |
(28,432 |
) |
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$ |
465,673 |
|
Intersegment revenues (losses) (2) |
16,244 |
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|
8,692 |
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|
(24,936 |
) |
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— |
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Depreciation and amortization expense |
43,014 |
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|
344 |
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|
5,854 |
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|
49,212 |
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Income (loss) from operations (3) |
44,346 |
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|
26,614 |
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(55,684 |
) |
|
15,276 |
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Interest expense, net of capitalized interest |
(121,636 |
) |
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— |
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(26,417 |
) |
|
(148,053 |
) |
Income (loss) before income taxes and non-controlling interest (4) |
(68,345 |
) |
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26,736 |
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(87,169 |
) |
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(128,778 |
) |
Share-based compensation |
9,183 |
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|
5,434 |
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24,940 |
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|
39,557 |
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Expenditures for additions to long-lived assets |
1,213,662 |
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|
1,103 |
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|
170 |
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1,214,935 |
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Three Months Ended September 30, 2015 |
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Revenues (losses) from external customers |
$ |
67,212 |
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$ |
(1,557 |
) |
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$ |
404 |
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$ |
66,059 |
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Intersegment revenues (losses) (2) |
233 |
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|
11,354 |
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(11,587 |
) |
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— |
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Depreciation and amortization expense |
16,775 |
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|
320 |
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|
4,543 |
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|
21,638 |
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Income (loss) from operations |
27,072 |
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(27,117 |
) |
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(52,029 |
) |
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(52,074 |
) |
Interest expense, net of capitalized interest |
(67,589 |
) |
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(14 |
) |
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(25,963 |
) |
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(93,566 |
) |
Loss before income taxes and non-controlling interest (4) |
(196,693 |
) |
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(27,665 |
) |
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(82,803 |
) |
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(307,161 |
) |
Share-based compensation |
1,316 |
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|
2,051 |
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24,084 |
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|
27,451 |
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Expenditures for additions to long-lived assets |
1,429,808 |
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|
403 |
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21,258 |
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1,451,469 |
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Nine Months Ended September 30, 2016 |
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Revenues (losses) from external customers |
$ |
530,526 |
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$ |
222,418 |
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$ |
(41,363 |
) |
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$ |
711,581 |
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Intersegment revenues (losses) (2) |
17,168 |
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29,259 |
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(46,427 |
) |
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— |
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Depreciation and amortization expense |
87,698 |
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|
965 |
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17,419 |
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|
106,082 |
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Income (loss) from operations (3) |
41,912 |
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(35,850 |
) |
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(157,799 |
) |
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(151,737 |
) |
Interest expense, net of capitalized interest |
(253,129 |
) |
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— |
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(77,228 |
) |
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(330,357 |
) |
Loss before income taxes and non-controlling interest (4) |
(519,877 |
) |
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(35,814 |
) |
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(256,732 |
) |
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(812,423 |
) |
Share-based compensation |
19,005 |
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20,580 |
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|
58,032 |
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|
97,617 |
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Expenditures for additions to long-lived assets |
3,800,814 |
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2,634 |
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13,238 |
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3,816,686 |
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Nine Months Ended September 30, 2015 |
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Revenues (losses) from external customers |
$ |
203,324 |
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$ |
(1,601 |
) |
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$ |
730 |
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$ |
202,453 |
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Intersegment revenues (losses) (2) |
827 |
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|
24,725 |
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(25,552 |
) |
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— |
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Depreciation and amortization expense |
47,787 |
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|
764 |
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|
11,010 |
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|
59,561 |
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Loss from operations |
(15,324 |
) |
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(58,667 |
) |
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(134,201 |
) |
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(208,192 |
) |
Interest expense, net of capitalized interest |
(169,899 |
) |
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(14 |
) |
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(68,751 |
) |
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(238,664 |
) |
Loss before income taxes and non-controlling interest (4) |
(507,751 |
) |
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(59,871 |
) |
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(217,014 |
) |
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(784,636 |
) |
Share-based compensation |
30,233 |
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12,138 |
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71,736 |
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114,107 |
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Expenditures for additions to long-lived assets |
5,964,244 |
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2,517 |
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70,913 |
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6,037,674 |
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(1) |
Includes corporate activities, business development, strategic activities and certain intercompany eliminations. These activities have been included in the corporate and other column. Also includes $45.1 million and $60.5 million for the three and nine months ended September 30, 2016, respectively, of Cheniere Marketing’s LNG revenues, which is eliminated in consolidation.
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(2) |
Intersegment revenues (losses) related to our LNG and natural gas marketing segment are primarily a result of international revenue allocations using a cost plus transfer pricing methodology. These LNG and natural gas marketing segment intersegment revenues (losses) are eliminated with intersegment revenues (losses) in our Consolidated Statements of Operations.
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(3) |
Includes restructuring expense of $23.1 million and $35.3 million for the three and nine months ended September 30, 2016, respectively, in the corporate and other column and $3.1 million and $13.9 million for the three and nine months ended September 30, 2016, respectively, in the LNG and natural gas marketing segment.
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(4) |
Items to reconcile income (loss) from operations and income (loss) before income taxes and non-controlling interest include consolidated other income (expense) amounts as presented on our Consolidated Statements of Operations primarily related to our LNG terminal segment.
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The following table (in thousands) shows total assets for each of our reporting segments:
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September 30, |
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December 31, |
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2016 |
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2015 |
LNG Terminal |
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$ |
21,365,364 |
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$ |
17,363,750 |
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LNG & Natural Gas Marketing |
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631,378 |
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550,896 |
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Corporate and Other |
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692,338 |
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894,407 |
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Total Consolidation |
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$ |
22,689,080 |
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$ |
18,809,053 |
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