Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.23.1
Leases
 3 Months Ended
Mar. 31, 2023
Leases [Abstract]  
Leases LEASES
Our leased assets consist primarily of LNG vessels leased under 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):
March 31, December 31,
Consolidated Balance Sheets Location 2023 2022
Right-of-use assets—Operating Operating lease assets $ 2,553  $ 2,625 
Right-of-use assets—Financing Property, plant and equipment, net of accumulated depreciation 498  511 
Total right-of-use assets $ 3,051  $ 3,136 
Current operating lease liabilities Current operating lease liabilities $ 604  $ 616 
Current finance lease liabilities Other current liabilities 31  28 
Non-current operating lease liabilities Operating lease liabilities 1,919  1,971 
Non-current finance lease liabilities Finance lease liabilities 487  494 
Total lease liabilities $ 3,041  $ 3,109 

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 March 31,
2023 2022
Operating lease cost (a) Operating costs and expenses (1) $ 213  $ 202 
Finance lease cost:
Amortization of right-of-use assets Depreciation and amortization expense 13  1 
Interest on lease liabilities Interest expense, net of capitalized interest 9  2 
Total lease cost $ 235  $ 205 
(a) Included in operating lease cost:
Short-term lease costs $ 23  $ 41 
Variable lease costs 12  9 
(1)Presented in cost of sales, operating and maintenance expense or selling, general and administrative expense consistent with the use of the asset under lease.
Future annual minimum lease payments for operating and finance leases as of March 31, 2023 are as follows (in millions): 
Years Ending December 31, Operating Leases Finance Leases
2023 $ 516  $ 49 
2024 670  66 
2025 529  71 
2026 396  75 
2027 300  77 
Thereafter 497  427 
Total lease payments (1) 2,908  765 
Less: Interest (385) (247)
Present value of lease liabilities $ 2,523  $ 518 
(1)Does not include approximately $3.3 billion of legally binding minimum payments primarily for vessel charters executed as of March 31, 2023, but 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:
March 31, 2023 December 31, 2022
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted-average remaining lease term (in years) 5.8 10.4 5.9 10.6
Weighted-average discount rate (1) 4.3% 7.8% 4.2% 7.8%
(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):
Three Months Ended March 31,
2023 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 181  $ 151 
Operating cash flows from finance leases 8  2 
Right-of-use assets obtained in exchange for operating lease liabilities 90  7 

LNG Vessel Subcharters

We sublease certain LNG vessels under charter to third parties while retaining our existing obligation to the original lessor. All of our sublease arrangements have been assessed as operating leases. The following table shows the sublease income recognized in other revenues on our Consolidated Statements of Operations (in millions):
Three Months Ended March 31,
2023 2022
Fixed income $ 134  $ 32 
Variable income 23  19 
Total sublease income $ 157  $ 51 
Future annual minimum sublease payments to be received from LNG vessel subcharters as of March 31, 2023 are as follows (in millions): 
Years Ending December 31, Sublease Payments
2023 $ 145 
2024 40 
2025 — 
2026 — 
2027 — 
Thereafter — 
Total sublease payments 185