Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.20.2
Leases
 9 Months Ended
Sep. 30, 2020
Leases [Abstract]  
Leases LEASESOur leased assets consist primarily of (1) LNG vessel time charters (“vessel charters”), (2) tug vessels, (3) office space and facilities and (4) land sites, all of which are classified as operating leases except for our tug vessels at 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):
Consolidated Balance Sheets Location September 30, 2020 December 31, 2019
Right-of-use assets—Operating Operating lease assets, net $ 630  $ 439 
Right-of-use assets—Financing Property, plant and equipment, net 54  56 
Total right-of-use assets $ 684  $ 495 
Current operating lease liabilities Current operating lease liabilities $ 160  $ 236 
Current finance lease liabilities Other current liabilities 2  1 
Non-current operating lease liabilities Non-current operating lease liabilities 473  189 
Non-current finance lease liabilities Non-current finance lease liabilities 58  58 
Total lease liabilities $ 693  $ 484 

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,
2020 2019 2020 2019
Operating lease cost (a) Operating costs and expenses (1) $ 77  $ 163  $ 316  $ 440 
Finance lease cost:
Amortization of right-of-use assets Depreciation and amortization expense —  1  2  3 
Interest on lease liabilities Interest expense, net of capitalized interest 2  2  7  7 
Total lease cost $ 79  $ 166  $ 325  $ 450 
(a) Included in operating lease cost:
Short-term lease costs $ 9  $ 57  $ 60  $ 150 
Variable lease costs paid to the lessor 3  8  12  21 
(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, 2020 are as follows (in millions): 
Years Ending December 31, Operating Leases (1) Finance Leases
2020 $ 74  $ 3 
2021 145  10 
2022 109  10 
2023 96  10 
2024 95  10 
Thereafter 284  136 
Total lease payments 803  179 
Less: Interest (170) (119)
Present value of lease liabilities $ 633  $ 60 
(1)    Does not include $1.5 billion of legally binding minimum lease payments primarily for vessel charters which were executed as of September 30, 2020 but will commence in future period primarily in the next two years 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, 2020 December 31, 2019
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted-average remaining lease term (in years) 8.6 17.9 8.4 18.7
Weighted-average discount rate (1) 5.7% 16.2% 5.2% 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,
2020 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 226  $ 280 
Operating cash flows from finance leases 8  6 
Right-of-use assets obtained in exchange for new operating lease liabilities 412  189 

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 September 30, 2020 and December 31, 2019, we had zero and $9 million in future minimum sublease payments to be received from LNG vessel subcharters, respectively, which will be recognized entirely within 2020. 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,
2020 2019 2020 2019
Fixed Income $ 9  $ 23  $ 61  $ 81 
Variable Income 1  5  24  15 
Total sublease income $ 10  $ 28  $ 85  $ 96