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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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Delaware
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333-192373
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27-3235920
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(State or other jurisdiction of incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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|
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700 Milam Street, Suite 1900
Houston, Texas
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77002
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(Address of principal executive offices)
|
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(Zip Code)
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Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
x
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Bcf/d
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|
billion cubic feet per day
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Bcf/yr
|
|
billion cubic feet per year
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DOE
|
|
U.S. Department of Energy
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EPC
|
|
engineering, procurement and construction
|
FERC
|
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Federal Energy Regulatory Commission
|
FTA countries
|
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countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
|
GAAP
|
|
generally accepted accounting principles in the United States
|
Henry Hub
|
|
the final settlement price (in USD per MMBtu) for the New York Mercantile Exchange’s Henry Hub natural gas futures contract for the month in which a relevant cargo’s delivery window is scheduled to begin
|
LIBOR
|
|
London Interbank Offered Rate
|
LNG
|
|
liquefied natural gas, a product of natural gas consisting primarily of methane (CH4) that is in liquid form at near atmospheric pressure
|
MMBtu
|
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million British thermal units, an energy unit
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mtpa
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million tonnes per annum
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non-FTA countries
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countries without a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted
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SEC
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Securities and Exchange Commission
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SPA
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LNG sale and purchase agreement
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Train
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a refrigerant compressor train used in the industrial process to convert natural gas into LNG
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TUA
|
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terminal use agreement
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Cheniere
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Cheniere Energy, Inc.
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Cheniere Investments
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Cheniere Energy Investments, LLC
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Cheniere Marketing
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Cheniere Marketing, LLC and subsidiaries
|
Cheniere Partners
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Cheniere Energy Partners, L.P.
|
Cheniere Terminals
|
|
Cheniere LNG Terminals, LLC
|
CTPL
|
|
Cheniere Creole Trail Pipeline, L.P.
|
SPLNG
|
|
Sabine Pass LNG, L.P.
|
|
|
September 30,
|
|
December 31,
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||||
|
|
2015
|
|
2014
|
||||
ASSETS
|
|
(unaudited)
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
|
327,150
|
|
|
155,810
|
|
||
Accounts receivable—affiliate
|
|
1,678
|
|
|
2,750
|
|
||
Advances to affiliate
|
|
36,623
|
|
|
23,969
|
|
||
Other current assets
|
|
7,953
|
|
|
3,541
|
|
||
Other current assets—affiliate
|
|
2,848
|
|
|
153
|
|
||
Total current assets
|
|
376,252
|
|
|
186,223
|
|
||
|
|
|
|
|
||||
Non-current restricted cash
|
|
—
|
|
|
457,053
|
|
||
Property, plant and equipment, net
|
|
9,205,564
|
|
|
6,962,395
|
|
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Debt issuance costs, net
|
|
297,374
|
|
|
228,913
|
|
||
Non-current derivative assets
|
|
30,657
|
|
|
11,744
|
|
||
Other non-current assets
|
|
162,772
|
|
|
99,417
|
|
||
Total assets
|
|
$
|
10,072,619
|
|
|
$
|
7,945,745
|
|
|
|
|
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|
||||
LIABILITIES AND MEMBER’S EQUITY
|
|
|
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|
||||
Current liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
4,978
|
|
|
$
|
5,974
|
|
Accrued liabilities
|
|
290,823
|
|
|
113,538
|
|
||
Due to affiliates
|
|
24,591
|
|
|
13,051
|
|
||
Derivative liabilities
|
|
7,388
|
|
|
23,247
|
|
||
Total current liabilities
|
|
327,780
|
|
|
155,810
|
|
||
|
|
|
|
|
||||
Long-term debt, net
|
|
8,765,660
|
|
|
6,517,266
|
|
||
Non-current derivative liabilities
|
|
8,832
|
|
|
268
|
|
||
Other non-current liabilities—affiliate
|
|
3,928
|
|
|
—
|
|
||
|
|
|
|
|
||||
Member’s equity
|
|
966,419
|
|
|
1,272,401
|
|
||
Total liabilities and member’s equity
|
|
$
|
10,072,619
|
|
|
$
|
7,945,745
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
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|
||||||||
Expenses
|
|
|
|
|
|
|
|
|
|
||||||
Operating and maintenance expense (income)
|
(30,483
|
)
|
|
2,224
|
|
|
(27,521
|
)
|
|
4,836
|
|
||||
Operating and maintenance expense—affiliate
|
328
|
|
|
29
|
|
|
456
|
|
|
34
|
|
||||
Terminal use agreement maintenance expense (income)
|
(837
|
)
|
|
10,064
|
|
|
16,684
|
|
|
24,497
|
|
||||
Terminal use agreement maintenance expense—affiliate
|
130
|
|
|
169
|
|
|
308
|
|
|
506
|
|
||||
Depreciation expense
|
461
|
|
|
310
|
|
|
1,279
|
|
|
671
|
|
||||
Development expense
|
113
|
|
|
1,383
|
|
|
2,631
|
|
|
8,671
|
|
||||
Development expense—affiliate
|
152
|
|
|
329
|
|
|
562
|
|
|
723
|
|
||||
General and administrative expense
|
1,307
|
|
|
513
|
|
|
4,027
|
|
|
3,859
|
|
||||
General and administrative expense—affiliate
|
18,938
|
|
|
17,215
|
|
|
58,304
|
|
|
52,644
|
|
||||
Total expenses (income)
|
(9,891
|
)
|
|
32,236
|
|
|
56,730
|
|
|
96,441
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations
|
9,891
|
|
|
(32,236
|
)
|
|
(56,730
|
)
|
|
(96,441
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net of capitalized interest
|
(11,952
|
)
|
|
(16,773
|
)
|
|
(31,261
|
)
|
|
(16,773
|
)
|
||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
(96,273
|
)
|
|
(114,335
|
)
|
||||
Derivative gain (loss), net
|
(10,872
|
)
|
|
5,379
|
|
|
(46,541
|
)
|
|
(89,222
|
)
|
||||
Other income (expense)
|
98
|
|
|
71
|
|
|
320
|
|
|
(105
|
)
|
||||
Total other expense
|
(22,726
|
)
|
|
(11,323
|
)
|
|
(173,755
|
)
|
|
(220,435
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(12,835
|
)
|
|
$
|
(43,559
|
)
|
|
$
|
(230,485
|
)
|
|
$
|
(316,876
|
)
|
|
Sabine Pass LNG-LP, LLC
|
|
Total Member’s Equity
|
||||
Balance at December 31, 2014
|
$
|
1,272,401
|
|
|
$
|
1,272,401
|
|
Capital contributions from Cheniere Partners
|
15,297
|
|
|
15,297
|
|
||
Non-cash distributions to affiliates
|
(90,794
|
)
|
|
(90,794
|
)
|
||
Net loss
|
(230,485
|
)
|
|
(230,485
|
)
|
||
Balance at September 30, 2015
|
$
|
966,419
|
|
|
$
|
966,419
|
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(230,485
|
)
|
|
$
|
(316,876
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Non-cash terminal use agreement maintenance expense
|
16,610
|
|
|
23,505
|
|
||
Depreciation expense
|
1,279
|
|
|
671
|
|
||
Amortization of debt issuance costs and premium
|
1,736
|
|
|
—
|
|
||
Loss on extinguishment of debt
|
96,273
|
|
|
114,335
|
|
||
Total losses on derivatives, net
|
13,136
|
|
|
89,670
|
|
||
Net cash used for settlement of derivative instruments
|
(40,990
|
)
|
|
(20,245
|
)
|
||
Changes in restricted cash for certain operating activities
|
230,187
|
|
|
119,196
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Advances to affiliate
|
(12,654
|
)
|
|
1,612
|
|
||
LNG inventory
|
1,952
|
|
|
(24,499
|
)
|
||
Accounts payable
|
(5,621
|
)
|
|
5,033
|
|
||
Accrued liabilities
|
(38,294
|
)
|
|
1,018
|
|
||
Due to affiliates
|
(10,029
|
)
|
|
9,639
|
|
||
Other, net
|
(3,825
|
)
|
|
(3,188
|
)
|
||
Other—affiliate
|
(19,275
|
)
|
|
129
|
|
||
Net cash provided by (used in) operating activities
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
|
||
Property, plant and equipment, net
|
(2,094,567
|
)
|
|
(1,888,589
|
)
|
||
Use of restricted cash for the acquisition of property, plant and equipment
|
2,144,821
|
|
|
1,900,776
|
|
||
Other
|
(50,254
|
)
|
|
(12,187
|
)
|
||
Net cash provided by (used in) investing activities
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
|
||
Proceeds from issuances of long-term debt
|
2,250,000
|
|
|
2,584,500
|
|
||
Repayments of long-term debt
|
—
|
|
|
(177,000
|
)
|
||
Debt issuance and deferred financing costs
|
(176,002
|
)
|
|
(94,290
|
)
|
||
Investment in restricted cash
|
(2,089,295
|
)
|
|
(2,323,620
|
)
|
||
Capital contributions from Cheniere Partners
|
15,297
|
|
|
10,410
|
|
||
Net cash provided by (used in) financing activities
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
—
|
|
|
—
|
|
||
Cash and cash equivalents—beginning of period
|
—
|
|
|
—
|
|
||
Cash and cash equivalents—end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2015
|
|
2014
|
||||
LNG terminal costs
|
|
|
|
|
||||
LNG terminal
|
|
$
|
13,171
|
|
|
$
|
12,821
|
|
LNG terminal construction-in-process
|
|
9,187,749
|
|
|
6,946,242
|
|
||
Accumulated depreciation
|
|
(540
|
)
|
|
(260
|
)
|
||
Total LNG terminal costs, net
|
|
9,200,380
|
|
|
6,958,803
|
|
||
Fixed assets
|
|
|
|
|
|
|
||
Furniture and fixtures
|
|
1,154
|
|
|
1,154
|
|
||
Vehicles
|
|
1,379
|
|
|
854
|
|
||
Machinery and equipment
|
|
339
|
|
|
339
|
|
||
Other
|
|
4,358
|
|
|
2,292
|
|
||
Accumulated depreciation
|
|
(2,046
|
)
|
|
(1,047
|
)
|
||
Total fixed assets, net
|
|
5,184
|
|
|
3,592
|
|
||
Property, plant and equipment, net
|
|
$
|
9,205,564
|
|
|
$
|
6,962,395
|
|
•
|
commodity derivatives to hedge the exposure to price risk attributable to future sales of our LNG inventory
(“Natural Gas Derivatives”)
;
|
•
|
commodity derivatives consisting of natural gas purchase agreements and associated economic hedges to secure natural gas feedstock for the Liquefaction Project
(“Liquefaction Supply Derivatives”)
; and
|
•
|
interest rate swaps to hedge the exposure to volatility in a portion of the floating-rate interest payments under the 2015 Credit Facilities (and previously the
2013 Credit Facilities
)
(“Interest Rate Derivatives”)
.
|
|
Fair Value Measurements as of
|
||||||||||||||||||||||||||||||
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||||||||||||||||||||
|
Quoted Prices in Active Markets
(Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Total
|
|
Quoted Prices in Active Markets
(Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Total
|
||||||||||||||||
Natural Gas Derivatives asset
|
$
|
—
|
|
|
$
|
423
|
|
|
$
|
—
|
|
|
$
|
423
|
|
|
$
|
—
|
|
|
$
|
1,071
|
|
|
$
|
—
|
|
|
$
|
1,071
|
|
Liquefaction Supply Derivatives asset
|
—
|
|
|
—
|
|
|
32,546
|
|
|
32,546
|
|
|
—
|
|
|
—
|
|
|
342
|
|
|
342
|
|
||||||||
Interest Rate Derivatives liability
|
—
|
|
|
(15,738
|
)
|
|
—
|
|
|
(15,738
|
)
|
|
—
|
|
|
(12,036
|
)
|
|
—
|
|
|
(12,036
|
)
|
|
|
Net Fair Value Asset (in thousands)
|
|
Valuation Technique
|
|
Significant Unobservable Input
|
|
Significant Unobservable Inputs Range
|
Liquefaction Supply Derivatives
|
|
$32,546
|
|
Income Approach
|
|
Basis Spread
|
|
$ (0.350) - $0.050
|
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
|
Natural Gas Derivatives (1)
|
|
Liquefaction Supply Derivatives
|
|
Total
|
|
Natural Gas Derivatives (1)
|
|
Liquefaction Supply Derivatives
|
|
Total
|
||||||||||||
Balance Sheet Location
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other current assets
|
|
$
|
423
|
|
|
$
|
2,371
|
|
|
$
|
2,794
|
|
|
$
|
1,071
|
|
|
$
|
76
|
|
|
$
|
1,147
|
|
Non-current derivative assets
|
|
—
|
|
|
30,657
|
|
|
30,657
|
|
|
—
|
|
|
586
|
|
|
586
|
|
||||||
Total derivative assets
|
|
423
|
|
|
33,028
|
|
|
33,451
|
|
|
1,071
|
|
|
662
|
|
|
1,733
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities
|
|
—
|
|
|
(349
|
)
|
|
(349
|
)
|
|
—
|
|
|
(53
|
)
|
|
(53
|
)
|
||||||
Non-current derivative liabilities
|
|
—
|
|
|
(133
|
)
|
|
(133
|
)
|
|
—
|
|
|
(267
|
)
|
|
(267
|
)
|
||||||
Total derivative liabilities
|
|
—
|
|
|
(482
|
)
|
|
(482
|
)
|
|
—
|
|
|
(320
|
)
|
|
(320
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative asset, net
|
|
$
|
423
|
|
|
$
|
32,546
|
|
|
$
|
32,969
|
|
|
$
|
1,071
|
|
|
$
|
342
|
|
|
$
|
1,413
|
|
|
(1)
|
Does not include collateral
calls
of
$0.3 million
and
$1.0 million
for such contracts, which are included in
other current assets
in our Balance Sheets as of
September 30, 2015
and
December 31, 2014
, respectively.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Natural Gas Derivatives gain (loss)
|
|
$
|
778
|
|
|
$
|
129
|
|
|
$
|
1,221
|
|
|
$
|
(448
|
)
|
Liquefaction Supply Derivatives gain (1)
|
|
32,103
|
|
|
—
|
|
|
32,184
|
|
|
—
|
|
|
(1)
|
There were
no
physical settlements during the reporting period.
|
|
|
Initial Notional Amount
|
|
Maximum Notional Amount
|
|
Effective Date
|
|
Maturity Date
|
|
Weighted Average Fixed Interest Rate Paid
|
|
Variable Interest Rate Received
|
Interest Rate Derivatives
|
|
$20.0 million
|
|
$628.8 million
|
|
August 14, 2012
|
|
July 31, 2019
|
|
1.98%
|
|
One-month LIBOR
|
|
|
|
|
Fair Value Measurements as of
|
||||||
|
|
Balance Sheet Location
|
|
September 30, 2015
|
|
December 31, 2014
|
||||
Interest Rate Derivatives
|
|
Derivative liabilities
|
|
$
|
(7,039
|
)
|
|
$
|
(23,194
|
)
|
Interest Rate Derivatives
|
|
Non-current derivative assets (Non-current derivative liabilities)
|
|
(8,699
|
)
|
|
11,158
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Interest Rate Derivatives gain (loss)
|
|
$
|
(10,872
|
)
|
|
$
|
5,379
|
|
|
$
|
(46,541
|
)
|
|
$
|
(89,222
|
)
|
|
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Balance Sheets
|
|
Net Amounts Presented in the Balance Sheets
|
||||||
Offsetting Derivative Assets (Liabilities)
|
|
|
|
|||||||||
As of September 30, 2015
|
|
|
|
|
|
|
||||||
Natural Gas Derivatives
|
|
$
|
460
|
|
|
$
|
(37
|
)
|
|
$
|
423
|
|
Liquefaction Supply Derivatives
|
|
33,028
|
|
|
—
|
|
|
33,028
|
|
|||
Liquefaction Supply Derivatives
|
|
(482
|
)
|
|
—
|
|
|
(482
|
)
|
|||
Interest Rate Derivatives
|
|
(15,738
|
)
|
|
—
|
|
|
(15,738
|
)
|
|||
As of December 31, 2014
|
|
|
|
|
|
|
||||||
Natural Gas Derivatives
|
|
1,079
|
|
|
(8
|
)
|
|
1,071
|
|
|||
Liquefaction Supply Derivatives
|
|
662
|
|
|
—
|
|
|
662
|
|
|||
Liquefaction Supply Derivatives
|
|
(320
|
)
|
|
—
|
|
|
(320
|
)
|
|||
Interest Rate Derivatives
|
|
11,158
|
|
|
—
|
|
|
11,158
|
|
|||
Interest Rate Derivatives
|
|
(23,194
|
)
|
|
—
|
|
|
(23,194
|
)
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2015
|
|
2014
|
||||
Interest expense and related debt fees
|
|
$
|
113,267
|
|
|
$
|
97,785
|
|
Liquefaction Project costs
|
|
177,556
|
|
|
15,753
|
|
||
Total accrued liabilities
|
|
$
|
290,823
|
|
|
$
|
113,538
|
|
|
|
Interest
|
|
September 30,
|
|
December 31,
|
||||
|
|
Rate
|
|
2015
|
|
2014
|
||||
Long-term debt
|
|
|
|
|
|
|
||||
2021 Senior Notes
|
|
5.625%
|
|
$
|
2,000,000
|
|
|
$
|
2,000,000
|
|
2022 Senior Notes
|
|
6.250%
|
|
1,000,000
|
|
|
1,000,000
|
|
||
2023 Senior Notes
|
|
5.625%
|
|
1,500,000
|
|
|
1,500,000
|
|
||
2024 Senior Notes
|
|
5.750%
|
|
2,000,000
|
|
|
2,000,000
|
|
||
2025 Senior Notes
|
|
5.625%
|
|
2,000,000
|
|
|
—
|
|
||
2015 Credit Facilities (1)
|
|
(2)
|
|
250,000
|
|
|
—
|
|
||
Working Capital Facility (3)
|
|
(4)
|
|
—
|
|
|
—
|
|
||
Total long-term debt
|
|
|
|
8,750,000
|
|
|
6,500,000
|
|
||
Long-term debt premium
|
|
|
|
|
|
|
|
|
||
2021 Senior Notes
|
|
|
|
9,090
|
|
|
10,177
|
|
||
2023 Senior Notes
|
|
|
|
6,570
|
|
|
7,089
|
|
||
Total long-term debt, net
|
|
|
|
$
|
8,765,660
|
|
|
$
|
6,517,266
|
|
|
(1)
|
Matures on the earlier of December 31, 2020 or the second anniversary of the completion date of Trains 1 through 5 of the Liquefaction Project.
|
(2)
|
Variable interest rate, at our election, is
LIBOR
or the base rate plus the applicable margin. The applicable margins for
LIBOR
loans range from
1.30%
to
1.75%
, depending on the applicable 2015 Credit Facility, and the applicable margin for base rate loans is
1.75%
. Interest on
LIBOR
loans is due and payable at the end of each
LIBOR
period, and interest on base rate loans is due and payable at the end of each quarter.
|
(3)
|
Matures on December 31, 2020, with various terms for underlying loans as further described below under
Working Capital Facility
. As of
September 30, 2015
and
December 31, 2014
, no loans were outstanding under the
Working Capital Facility
or the
LC Agreement
it replaced.
|
(4)
|
Variable interest rates, based on LIBOR or the base rate, as further described below under
Working Capital Facility
.
|
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||||
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
||||||||
2021 Senior Notes, net of premium (1)
|
|
$
|
2,009,090
|
|
|
$
|
1,853,386
|
|
|
$
|
2,010,177
|
|
|
$
|
1,985,050
|
|
2022 Senior Notes (1)
|
|
1,000,000
|
|
|
930,000
|
|
|
1,000,000
|
|
|
1,020,000
|
|
||||
2023 Senior Notes, net of premium (1)
|
|
1,506,570
|
|
|
1,344,614
|
|
|
1,507,089
|
|
|
1,476,947
|
|
||||
2024 Senior Notes (1)
|
|
2,000,000
|
|
|
1,765,000
|
|
|
2,000,000
|
|
|
1,970,000
|
|
||||
2025 Senior Notes (1)
|
|
2,000,000
|
|
|
1,755,000
|
|
|
—
|
|
|
—
|
|
||||
2015 Credit Facilities (2)
|
|
250,000
|
|
|
250,000
|
|
|
—
|
|
|
—
|
|
||||
Working Capital Facility (2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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
September 30, 2015
and
December 31, 2014
, as applicable.
|
(2)
|
The Level 3 estimated fair value approximates the principal amount because the interest rates are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty.
|
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
Cash paid during the year for interest, net of amounts capitalized and deferred
|
$
|
13,471
|
|
|
$
|
—
|
|
Balance in property, plant and equipment, net funded with accounts payable and accrued liabilities (including affiliate)
|
358,299
|
|
|
270,761
|
|
||
Non-cash distributions to affiliates for conveyance of assets
|
90,645
|
|
|
745
|
|
||
Other non-cash distribution to affiliates
|
149
|
|
|
—
|
|
||
Non-cash conveyance of assets to non-affiliate
|
13,169
|
|
|
—
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
statements that we expect to commence or complete construction of our natural gas liquefaction project, or any expansions or portions thereof, by certain dates, or at all;
|
•
|
s
tatements regarding future levels of domestic and international natural gas production, supply or consumption or future levels of LNG exports from North America and other countries worldwide or purchases of natural gas, regardless of the source of such information, or the transportation or other infrastructure or demand for and prices related to natural gas, LNG or other hydrocarbon products
;
|
•
|
statements regarding any financing transactions or arrangements, or ability to enter into such transactions;
|
•
|
statements relating to the construction of our Trains, including statements concerning the engagement of any
EPC
contractor or other contractor and the anticipated terms and provisions of any agreement with any
EPC
or other contractor, and anticipated costs related thereto;
|
•
|
statements regarding any
SPA
or other agreement to be entered into or performed substantially in the future, including any revenues anticipated to be received and the anticipated timing thereof, and statements regarding the amounts of total liquefaction or storage capacities that are, or may become, subject to contracts;
|
•
|
statements regarding counterparties to our commercial contracts, construction contracts and other contracts;
|
•
|
statements regarding our planned development and construction of additional Trains, including the financing of such Trains;
|
•
|
statements that our Trains, when completed, will have certain characteristics, including amounts of liquefaction capacities;
|
•
|
statements regarding our business strategy, our strengths, our business and operation plans or any other plans, forecasts, projections, or objectives, including anticipated revenues and capital expenditures, any or all of which are subject to change;
|
•
|
statements regarding legislative, governmental, regulatory, administrative or other public body actions, approvals, requirements, permits, applications, filings, investigations, proceedings or decisions; and
|
•
|
any other statements that relate to non-historica
l or future information.
|
•
|
Overview of Business
|
•
|
Overview of Significant Events
|
•
|
Liquidity and Capital Resources
|
•
|
Results of Operations
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Summary of Critical Accounting Estimates
|
•
|
Recent Accounting Standards
|
•
|
We issued an aggregate principal amount of $2.0 billion of 5.625% Senior Secured Notes due 2025
(the “2025 Senior Notes”)
. Net proceeds from the offering will be used to pay a portion of the capital costs associated with the construction of the first four Trains of the
Liquefaction Project
.
|
•
|
We received authorization from the
FERC
to site, construct and operate Trains 5 and 6 of the
Liquefaction Project
.
|
•
|
We received authorization from the
DOE
to export up to a combined total of the equivalent of 503.3
Bcf/yr
of domestically produced LNG by vessel from Trains 5 and 6 of the
Liquefaction Project
to
non-FTA countries
for a 20-year term.
|
•
|
We entered into a lump sum turnkey contract for the engineering, procurement and construction of Train 5 of the
Liquefaction Project
(the “EPC Contract (Train 5)”)
.
|
•
|
We entered into four credit facilities
(collectively, the “2015 Credit Facilities”)
totaling $4.6 billion, which replaced our existing credit facilities. The
2015 Credit Facilities
will be used to fund a portion of the costs of developing, constructing and placing into operation Trains 1 through 5 of the
Liquefaction Project
.
|
•
|
We issued a notice to proceed to Bechtel Oil, Gas and Chemicals, Inc.
(“Bechtel”)
under the
EPC Contract (Train 5)
.
|
•
|
We entered into a $1.2 billion Amended and Restated Senior Working Capital Revolving Credit and Letter of Credit Reimbursement Agreement
(the “Working Capital Facility”)
, which replaced our existing Senior Letter of Credit and Reimbursement Agreement that was entered into in April 2014
(the “LC Agreement”)
. The
Working Capital Facility
will be used primarily for certain working capital requirements related to developing and placing into operation the
Liquefaction Project
.
|
•
|
$2.0 billion
of 5.625% Senior Secured Notes due 2021
(the “2021 Senior Notes”)
;
|
•
|
$1.0 billion
of 6.250% Senior Secured Notes due 2022
(the “2022 Senior Notes”)
;
|
•
|
$1.5 billion
of 5.625% Senior Secured Notes due 2023
(the “2023 Senior Notes”)
;
|
•
|
$2.0 billion
of 5.75% Senior Secured Notes due 2024
(the “2024 Senior Notes” and collectively with the 2021 Senior Notes, the 2022 Senior Notes, the 2023 Senior Notes and the 2025 Senior Notes, the “Senior Notes”)
; and
|
•
|
$2.0 billion
of the
2025 Senior Notes
.
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Sources of cash and cash equivalents
|
|
|
|
|
||||
Proceeds from issuances of long-term debt
|
|
$
|
2,250,000
|
|
|
$
|
2,584,500
|
|
Use of restricted cash for the acquisition of property, plant and equipment
|
|
2,144,821
|
|
|
1,900,776
|
|
||
Capital contributions from Cheniere Partners
|
|
15,297
|
|
|
10,410
|
|
||
Total sources of cash and cash equivalents
|
|
4,410,118
|
|
|
4,495,686
|
|
||
Uses of cash and cash equivalents
|
|
|
|
|
||||
Investment in restricted cash
|
|
(2,089,295
|
)
|
|
(2,323,620
|
)
|
||
Property, plant and equipment, net
|
|
(2,094,567
|
)
|
|
(1,888,589
|
)
|
||
Repayments of long-term debt
|
|
—
|
|
|
(177,000
|
)
|
||
Debt issuance and deferred financing costs
|
|
(176,002
|
)
|
|
(94,290
|
)
|
||
Other
|
|
(50,254
|
)
|
|
(12,187
|
)
|
||
Total uses of cash and cash equivalents
|
|
(4,410,118
|
)
|
|
(4,495,686
|
)
|
||
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
|
—
|
|
|
—
|
|
||
Cash and cash equivalents-beginning of period
|
|
—
|
|
|
—
|
|
||
Cash and cash equivalents-end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
Exhibit No.
|
|
Description
|
10.1*
|
|
Change order to the Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Sabine Pass LNG Stage 2 Liquefaction Facility, dated as of December 20, 2012, between Sabine Pass Liquefaction, LLC and Bechtel Oil, Gas and Chemicals, Inc.: the Change Order CO-00019 East Meter Piping Tie-ins, dated August 26, 2015
|
10.2*
|
|
Change order to the Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Sabine Pass LNG Stage 3 Liquefaction Facility, dated as of May 4, 2015, between Sabine Pass Liquefaction, LLC and Bechtel Oil, Gas and Chemicals, Inc.: the Change Order CO-00002 Credit to EPC Contract Value for TSA Work, dated September 17, 2015
|
10.3
|
|
Amended and Restated Senior Working Capital Revolving Credit and Letter of Credit Reimbursement Agreement, dated as of September 4, 2015, among Sabine Pass Liquefaction, LLC, as Borrower, The Bank of Nova Scotia, as Senior Issuing Bank and Senior Facility Agent, ABN Amro Capital USA LLC, HSBC Bank USA, National Association and ING Capital LLC, as Senior Issuing Banks, Société Générale, as Swing Line Lender, Société Générale, as the Common Security Trustee, and the senior lenders party thereto from time to time and for the benefit of HSBC Bank USA, National Association, ING Capital LLC, Morgan Stanley Bank, N.A. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers, Joint Lead Bookrunners, and Co-Documentation Agents, ABN Amro Capital USA LLC, The Bank of Nova Scotia, The Bank of Tokyo-Mitsubishi UFJ, LTD. and Société Générale, as Joint Lead Arrangers, Joint Lead Bookrunners, and Co-Syndication Agents, Industrial and Commercial Bank of China Limited, New York Branch and Lloyds Bank PLC, as Mandated Lead Arrangers, and Landesbank Baden-Württemberg, New York Branch, as Manager (Incorporated by reference to Exhibit 10.1 to the Cheniere Energy Partners, L.P.’s Current Report on Form 8-K (SEC File No. 001-33366), filed on September 11, 2015)
|
10.4
|
|
Amendment No. 1 of LNG Sale and Purchase Agreement (FOB), dated August 28, 2015, between Sabine Pass Liquefaction, LLC (Seller) and Total Gas & Power North America, Inc. (Buyer) (Incorporated by reference to Exhibit 10.4 to Cheniere Energy Partner, L.P.’s Quarterly Report on Form 10-Q (SEC File No. 001-33366), filed on October 30, 2015)
|
10.5
|
|
Amendment No. 1 of LNG Sale and Purchase Agreement (FOB), dated September 11, 2015, between Sabine Pass Liquefaction, LLC (Seller) and Centrica plc (Buyer) (Incorporated by reference to Exhibit 10.5 to Cheniere Energy Partner, L.P.’s Quarterly Report on Form 10-Q (SEC File No. 001-33366), filed on October 30, 2015)
|
10.6
|
|
Omnibus Amendment, dated as of September 24, 2015, to the Second Amended and Restated Common Terms Agreement among Sabine Pass Liquefaction, LLC, as Borrower, the representatives and agents from time to time parties thereto, and Société Générale, as the Common Security Trustee and Intercreditor Agent (Incorporated by reference to Exhibit 10.6 to Cheniere Energy Partner, L.P.’s Quarterly Report on Form 10-Q (SEC File No. 001-33366), filed on October 30, 2015)
|
31.1*
|
|
Certification by Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
|
31.2*
|
|
Certification by Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
|
32.1**
|
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2**
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
|
|
SABINE PASS LIQUEFACTION, LLC
|
|
|
|
|
|
Date:
|
October 29, 2015
|
By:
|
/s/ Michael J. Wortley
|
|
|
|
Michael J. Wortley
|
|
|
|
Chief Financial Officer
|
|
|
|
(on behalf of the registrant and
as principal financial officer)
|
|
|
|
|
Date:
|
October 29, 2015
|
By:
|
/s/ Leonard Travis
|
|
|
|
Leonard Travis
|
|
|
|
Chief Accounting Officer
|
|
|
|
(on behalf of the registrant and
as principal accounting officer)
|
PROJECT NAME:
Sabine Pass LNG Stage 2 Liquefaction Facility
OWNER:
Sabine Pass Liquefaction, LLC
CONTRACTOR:
Bechtel Oil, Gas and Chemicals, Inc.
DATE OF AGREEMENT: December 20, 2012
|
CHANGE ORDER NUMBER:
CO-00019
DATE OF CHANGE ORDER:
August 26, 2015
|
1.
|
Parties agree Bechtel will perform the engineering, procurement, and construction of the 36” East Meter Pipe tie-in to the existing feed gas piping at Stages 1 and 2, as identified in Exhibit A. The scope of work excludes the 36” East Meter Pipe which shall be installed underground by SPL, hydro-tested, capped, buried and maintained under positive nitrogen pressure. The scope of work will also exclude the procurement of three (3) 36” control valves: HV-11122; XV-11120; XV-11121 which were procured by SPL and will be free-issued to Bechtel.
|
2.
|
The overall cost breakdown for this Change Order is detailed in Exhibit B.
|
3.
|
Schedule C-1 (Milestone Payment Schedule) of Attachment C of the Agreement will be amended by including the milestone(s) listed in Exhibit C of this Change Order.
|
The original Contract Price was
|
$
|
3,769,000,000
|
|
Net change by previously authorized Change Orders (#0001-00018)
|
$
|
26,387,014
|
|
The Contract Price prior to this Change Order was
|
$
|
3,795,387,014
|
|
The Contract Price will be increased by this Change Order in the amount of
|
$
|
4,912,762
|
|
The new Contract Price including this Change Order will be
|
$
|
3,800,299,776
|
|
/s/ Ed Lehotsky
|
|
/s/ JT Jackson
|
Owner
|
|
Contractor
|
Ed Lehotsky
|
|
JT Jackson
|
Name
|
|
Name
|
VP LNG Projects
|
|
Sr. Vice President
|
Title
|
|
Title
|
9/15/15
|
|
8-26-15
|
Date of Signing
|
|
Date of Signing
|
PROJECT NAME:
Sabine Pass LNG Stage 3 Liquefaction Facility
OWNER:
Sabine Pass Liquefaction, LLC
CONTRACTOR:
Bechtel Oil, Gas and Chemicals, Inc.
DATE OF AGREEMENT: May 4, 2015
|
CHANGE ORDER NUMBER:
CO-00002
DATE OF CHANGE ORDER:
September 17, 2015
|
The original Contract Price was
|
$
|
2,987,000,000
|
|
Net change by previously authorized Change Orders (00001)
|
$
|
(35,865,556
|
)
|
The Contract Price prior to this Change Order was
|
$
|
2,951,134,444
|
|
The Contract Price will be decreased by this Change Order in the amount of
|
$
|
(2,832,019
|
)
|
The new Contract Price including this Change Order will be
|
$
|
2,948,302,425
|
|
/s/ Ed Lehotsky
|
|
/s/ JT Jackson
|
Owner
|
|
Contractor
|
Ed Lehotsky
|
|
JT Jackson
|
Name
|
|
Name
|
VP LNG Projects
|
|
Sr. Vice President
|
Title
|
|
Title
|
9/29/2015
|
|
9-18-15
|
Date of Signing
|
|
Date of Signing
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Sabine Pass Liquefaction, LLC;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
c)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ R. Keith Teague
|
R. Keith Teague
|
Principal Executive Officer of
|
Sabine Pass Liquefaction, LLC
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Sabine Pass Liquefaction, LLC;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
c)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Michael J. Wortley
|
Michael J. Wortley
|
Chief Financial Officer of
|
Sabine Pass Liquefaction, LLC
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ R. Keith Teague
|
R. Keith Teague
|
Principal Executive Officer of
|
Sabine Pass Liquefaction, LLC
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Michael J. Wortley
|
Michael J. Wortley
|
Chief Financial Officer of
|
Sabine Pass Liquefaction, LLC
|