|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware
|
333-215435
|
47-1929160
|
(State or other jurisdiction of incorporation or organization)
|
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
|
|
|
700 Milam Street, Suite 1900
Houston, Texas
|
|
77002
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
|
|
|
Large accelerated filer
¨
|
Accelerated filer
¨
|
|||
Non-accelerated filer
x
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|||
|
|
|
Emerging growth company
¨
|
|
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bcf
|
|
billion cubic feet
|
Bcf/d
|
|
billion cubic feet per day
|
Bcf/yr
|
|
billion cubic feet per year
|
Bcfe
|
|
billion cubic feet equivalent
|
DOE
|
|
U.S. Department of Energy
|
EPC
|
|
engineering, procurement and construction
|
FERC
|
|
Federal Energy Regulatory Commission
|
FTA countries
|
|
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 that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
|
MMBtu
|
|
million British thermal units, an energy unit
|
mtpa
|
|
million tonnes per annum
|
non-FTA countries
|
|
countries with which the United States does not have a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted
|
SEC
|
|
Securities and Exchange Commission
|
SPA
|
|
LNG sale and purchase agreement
|
TBtu
|
|
trillion British thermal units, an energy unit
|
Train
|
|
an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
|
PART I.
|
FINANCIAL INFORMATION
|
ITEM 1.
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||||
ASSETS
|
|
(unaudited)
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
|
103,290
|
|
|
197,201
|
|
||
Advances to affiliate
|
|
13,629
|
|
|
20,108
|
|
||
Other current assets
|
|
1,353
|
|
|
37,195
|
|
||
Other current assets—affiliate
|
|
159
|
|
|
141
|
|
||
Total current assets
|
|
118,431
|
|
|
254,645
|
|
||
|
|
|
|
|
||||
Non-current restricted cash
|
|
—
|
|
|
73,339
|
|
||
Property, plant and equipment, net
|
|
7,491,961
|
|
|
6,076,672
|
|
||
Debt issuance and deferred financing costs, net
|
|
109,581
|
|
|
155,847
|
|
||
Non-current advances under long-term contracts
|
|
—
|
|
|
46,398
|
|
||
Other non-current assets, net
|
|
37,285
|
|
|
29,547
|
|
||
Total assets
|
|
$
|
7,757,258
|
|
|
$
|
6,636,448
|
|
|
|
|
|
|
||||
LIABILITIES AND MEMBER’S EQUITY
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
9,352
|
|
|
$
|
9,120
|
|
Accrued liabilities
|
|
96,876
|
|
|
137,648
|
|
||
Due to affiliates
|
|
15,574
|
|
|
7,050
|
|
||
Derivative liabilities
|
|
31,672
|
|
|
43,383
|
|
||
Total current liabilities
|
|
153,474
|
|
|
197,201
|
|
||
|
|
|
|
|
||||
Long-term debt, net
|
|
6,122,876
|
|
|
5,081,715
|
|
||
Non-current derivative liabilities
|
|
53,575
|
|
|
43,105
|
|
||
Other non-current liabilities—affiliate
|
|
—
|
|
|
618
|
|
||
|
|
|
|
|
||||
Member’s equity
|
|
1,427,333
|
|
|
1,313,809
|
|
||
Total liabilities and member’s equity
|
|
$
|
7,757,258
|
|
|
$
|
6,636,448
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Operating and maintenance expense
|
858
|
|
|
321
|
|
|
1,564
|
|
|
537
|
|
||||
Operating and maintenance expense—affiliate
|
96
|
|
|
17
|
|
|
149
|
|
|
20
|
|
||||
Development expense (recovery)
|
323
|
|
|
(52
|
)
|
|
415
|
|
|
(184
|
)
|
||||
Development expense (recovery)—affiliate
|
—
|
|
|
58
|
|
|
8
|
|
|
(120
|
)
|
||||
General and administrative expense
|
1,548
|
|
|
1,002
|
|
|
2,963
|
|
|
1,777
|
|
||||
General and administrative expense—affiliate
|
153
|
|
|
274
|
|
|
464
|
|
|
291
|
|
||||
Depreciation and amortization expense
|
155
|
|
|
52
|
|
|
289
|
|
|
84
|
|
||||
Other
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Total expenses
|
3,138
|
|
|
1,672
|
|
|
5,857
|
|
|
2,405
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(3,138
|
)
|
|
(1,672
|
)
|
|
(5,857
|
)
|
|
(2,405
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other expense
|
|
|
|
|
|
|
|
||||||||
Loss on early extinguishment of debt
|
(32,480
|
)
|
|
(29,011
|
)
|
|
(32,480
|
)
|
|
(29,011
|
)
|
||||
Derivative loss, net
|
(33,096
|
)
|
|
(75,877
|
)
|
|
(32,096
|
)
|
|
(236,053
|
)
|
||||
Other expense
|
(44
|
)
|
|
(25
|
)
|
|
(82
|
)
|
|
—
|
|
||||
Total other expense
|
(65,620
|
)
|
|
(104,913
|
)
|
|
(64,658
|
)
|
|
(265,064
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(68,758
|
)
|
|
$
|
(106,585
|
)
|
|
$
|
(70,515
|
)
|
|
$
|
(267,469
|
)
|
|
Cheniere CCH HoldCo I, LLC
|
|
Total Member
’
s
Equity
|
||||
Balance at December 31, 2016
|
$
|
1,313,809
|
|
|
$
|
1,313,809
|
|
Capital contributions
|
184,039
|
|
|
184,039
|
|
||
Net loss
|
(70,515
|
)
|
|
(70,515
|
)
|
||
Balance at June 30, 2017
|
$
|
1,427,333
|
|
|
$
|
1,427,333
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(70,515
|
)
|
|
$
|
(267,469
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
289
|
|
|
84
|
|
||
Loss on early extinguishment of debt
|
32,480
|
|
|
29,011
|
|
||
Total losses on derivatives, net
|
32,479
|
|
|
236,053
|
|
||
Net cash used for settlement of derivative instruments
|
(33,720
|
)
|
|
(13,710
|
)
|
||
Other
|
5
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
157
|
|
|
761
|
|
||
Due to affiliates
|
726
|
|
|
(438
|
)
|
||
Other, net
|
(1,047
|
)
|
|
(1,350
|
)
|
||
Other, net—affiliate
|
(636
|
)
|
|
149
|
|
||
Net cash used in operating activities
|
(39,782
|
)
|
|
(16,909
|
)
|
||
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
|||
Property, plant and equipment, net
|
(1,382,418
|
)
|
|
(1,031,602
|
)
|
||
Other
|
32,391
|
|
|
(15,306
|
)
|
||
Net cash used in investing activities
|
(1,350,027
|
)
|
|
(1,046,908
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
|||
Proceeds from issuances of debt
|
2,497,000
|
|
|
2,318,000
|
|
||
Repayments of debt
|
(1,436,050
|
)
|
|
(1,050,660
|
)
|
||
Debt issuance and deferred financing costs
|
(22,401
|
)
|
|
(27,166
|
)
|
||
Capital contributions
|
184,039
|
|
|
—
|
|
||
Other
|
(29
|
)
|
|
(10
|
)
|
||
Net cash provided by financing activities
|
1,222,559
|
|
|
1,240,164
|
|
||
|
|
|
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(167,250
|
)
|
|
176,347
|
|
||
Cash, cash equivalents and restricted cash—beginning of period
|
270,540
|
|
|
46,770
|
|
||
Cash, cash equivalents and restricted cash—end of period
|
$
|
103,290
|
|
|
$
|
223,117
|
|
|
June 30, 2017
|
||
Cash and cash equivalents
|
$
|
—
|
|
Restricted cash
|
103,290
|
|
|
Total cash, cash equivalents and restricted cash
|
$
|
103,290
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||||
Current restricted cash
|
|
|
|
|
||||
Liquefaction Project
|
|
$
|
103,290
|
|
|
$
|
197,201
|
|
|
|
|
|
|
||||
Non-current restricted cash
|
|
|
|
|
||||
Liquefaction Project
|
|
—
|
|
|
73,339
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||||
LNG terminal costs
|
|
|
|
|
||||
LNG terminal construction-in-process
|
|
$
|
7,474,008
|
|
|
$
|
6,060,299
|
|
LNG site and related costs
|
|
13,844
|
|
|
14,006
|
|
||
Total LNG terminal costs
|
|
7,487,852
|
|
|
6,074,305
|
|
||
Fixed assets
|
|
|
|
|
||||
Fixed assets
|
|
4,598
|
|
|
2,620
|
|
||
Accumulated depreciation
|
|
(489
|
)
|
|
(253
|
)
|
||
Total fixed assets, net
|
|
4,109
|
|
|
2,367
|
|
||
Property, plant and equipment, net
|
|
$
|
7,491,961
|
|
|
$
|
6,076,672
|
|
•
|
interest rate swaps
(“Interest Rate Derivatives”)
to protect against volatility of future cash flows and hedge a portion of the variable-rate interest payments on our credit facility
(the “2015 CCH Credit Facility”)
and
|
•
|
natural gas supply contracts for the commissioning and operation of the
Liquefaction Project
(“Liquefaction Supply Derivatives”)
.
|
|
|
Initial Notional Amount
|
|
Maximum Notional Amount
|
|
Effective Date
|
|
Maturity Date
|
|
Weighted Average Fixed Interest Rate Paid
|
|
Variable Interest Rate Received
|
Interest Rate Derivatives
|
|
$28.8 million
|
|
$4.9 billion
|
|
May 20, 2015
|
|
May 31, 2022
|
|
2.29%
|
|
One-month LIBOR
|
|
|
June 30,
|
|
December 31,
|
||||
Balance Sheet Location
|
|
2017
|
|
2016
|
||||
Derivative liabilities
|
|
$
|
(31,672
|
)
|
|
$
|
(43,383
|
)
|
Non-current derivative liabilities
|
|
(53,192
|
)
|
|
(43,105
|
)
|
||
Total derivative liabilities
|
|
$
|
(84,864
|
)
|
|
$
|
(86,488
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest Rate Derivatives loss
|
|
$
|
(33,096
|
)
|
|
$
|
(75,877
|
)
|
|
$
|
(32,096
|
)
|
|
$
|
(236,053
|
)
|
|
|
Net Fair Value Liability
(in thousands)
|
|
Valuation Technique
|
|
Significant Unobservable Input
|
|
Significant Unobservable Inputs Range
|
Liquefaction Supply Derivatives
|
|
$(383)
|
|
Income Approach
|
|
Basis Spread
|
|
$(0.098) - $0.080
|
|
|
June 30,
|
|
December 31,
|
||||
Balance Sheet Location
|
|
2017
|
|
2016
|
||||
Non-current derivative liabilities
|
|
$
|
(383
|
)
|
|
$
|
—
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
Statement of Operations Location
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Liquefaction Supply Derivatives loss
|
Operating and maintenance expense
|
|
$
|
383
|
|
|
$
|
—
|
|
|
$
|
383
|
|
|
$
|
—
|
|
|
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amounts Presented in the Consolidated Balance Sheets
|
||||||
Offsetting Derivative Assets (Liabilities)
|
|
|
|
|||||||||
As of June 30, 2017
|
|
|
|
|
|
|
||||||
Interest Rate Derivatives
|
|
$
|
(86,112
|
)
|
|
$
|
1,248
|
|
|
$
|
(84,864
|
)
|
Liquefaction Supply Derivatives
|
|
(383
|
)
|
|
—
|
|
|
(383
|
)
|
|||
As of December 31, 2016
|
|
|
|
|
|
|
||||||
Interest Rate Derivatives
|
|
(95,923
|
)
|
|
9,435
|
|
|
(86,488
|
)
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||||
Interest costs and related debt fees
|
|
$
|
9,401
|
|
|
$
|
59,994
|
|
Liquefaction Project costs
|
|
74,369
|
|
|
73,150
|
|
||
Other
|
|
13,106
|
|
|
4,504
|
|
||
Total accrued liabilities
|
|
$
|
96,876
|
|
|
$
|
137,648
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||||
Long-term debt
|
|
|
|
|
||||
7.000% Senior Secured Notes due 2024 (“2024 CCH Senior Notes”)
|
|
$
|
1,250,000
|
|
|
$
|
1,250,000
|
|
5.875% Senior Secured Notes due 2025 (“2025 CCH Senior Notes”)
|
|
1,500,000
|
|
|
1,500,000
|
|
||
5.125% Senior Secured Notes due 2027 (“2027 CCH Senior Notes”)
|
|
1,500,000
|
|
|
—
|
|
||
2015 CCH Credit Facility
|
|
1,941,737
|
|
|
2,380,788
|
|
||
Unamortized debt issuance costs
|
|
(68,861
|
)
|
|
(49,073
|
)
|
||
Total long-term debt, net
|
|
6,122,876
|
|
|
5,081,715
|
|
||
|
|
|
|
|
||||
Current debt
|
|
|
|
|
||||
$350 million CCH Working Capital Facility (“CCH Working Capital Facility”)
|
|
—
|
|
|
—
|
|
||
Total debt, net
|
|
$
|
6,122,876
|
|
|
$
|
5,081,715
|
|
|
|
2015 CCH Credit Facility
|
|
CCH Working Capital Facility
|
||||
Original facility size
|
|
$
|
8,403,714
|
|
|
$
|
350,000
|
|
Outstanding balance
|
|
1,941,737
|
|
|
—
|
|
||
Commitments terminated
|
|
3,832,263
|
|
|
—
|
|
||
Letters of credit issued
|
|
—
|
|
|
82,161
|
|
||
Available commitment
|
|
$
|
2,629,714
|
|
|
$
|
267,839
|
|
|
|
|
|
|
||||
Interest rate
|
|
LIBOR plus 2.25% or base rate plus 1.25% (1)
|
|
LIBOR plus 1.50% - 2.00% or base rate plus 0.50% - 1.00%
|
||||
Maturity date
|
|
Earlier of May 13, 2022 or second anniversary of CCL Trains 1 and 2 completion date
|
|
December 14, 2021, with various terms for underlying loans
|
|
(1)
|
There is a
0.25%
step-up for both LIBOR and base rate loans following completion of Trains 1 and 2 of the
Liquefaction Project
.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total interest cost
|
|
$
|
88,168
|
|
|
$
|
51,160
|
|
|
$
|
168,356
|
|
|
$
|
92,755
|
|
Capitalized interest, including amounts capitalized as an Allowance for Funds Used During Construction
|
|
(88,168
|
)
|
|
(51,160
|
)
|
|
(168,356
|
)
|
|
(92,755
|
)
|
||||
Total interest expense, net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
Carrying
Amount |
|
Estimated
Fair Value |
|
Carrying
Amount |
|
Estimated
Fair Value |
||||||||
Senior notes (1)
|
|
$
|
4,250,000
|
|
|
$
|
4,518,438
|
|
|
$
|
2,750,000
|
|
|
$
|
2,901,563
|
|
Credit facilities (2)
|
|
1,941,737
|
|
|
1,941,737
|
|
|
2,380,788
|
|
|
2,380,788
|
|
|
(1)
|
Includes
2024 CCH Senior Notes
,
2025 CCH Senior Notes
and
2027 CCH Senior Notes
(collectively, the “CCH Senior Notes”)
. The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of the
CCH Senior Notes
and other similar instruments.
|
(2)
|
Includes
2015 CCH Credit Facility
and
CCH Working Capital Facility
. 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.
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash paid during the period for interest, net of amounts capitalized
|
$
|
34,309
|
|
|
$
|
—
|
|
Standard
|
|
Description
|
|
Expected Date of Adoption
|
|
Effect on our Consolidated Financial Statements or Other Significant Matters
|
ASU 2014-09,
Revenue from Contracts with Customers (Topic 606)
, and subsequent amendments thereto
|
|
This standard provides a single, comprehensive revenue recognition model which replaces and supersedes most existing revenue recognition guidance and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard requires that the costs to obtain and fulfill contracts with customers should be recognized as assets and amortized to match the pattern of transfer of goods or services to the customer if expected to be recoverable. The standard also requires enhanced disclosures. This guidance may be adopted either retrospectively to each prior reporting period presented subject to allowable practical expedients (“full retrospective approach”) or as a cumulative-effect adjustment as of the date of adoption (“modified retrospective approach”).
|
|
January 1, 2018
|
|
We continue to evaluate the effect of this standard on our Consolidated Financial Statements. Preliminarily, we plan to adopt this standard using the full retrospective approach and we do not currently anticipate that the adoption will have a material impact upon our revenues. The Financial Accounting Standards Board has issued and may issue in the future amendments and interpretive guidance which may cause our evaluation to change. Furthermore, we routinely enter into new contracts and we cannot predict with certainty whether the accounting for any future contract under the new standard would result in a significant change from existing guidance. Because this assessment is preliminary and the accounting for revenue recognition is subject to significant judgment, this conclusion could change as we finalize our assessment. We have not yet determined the impact that recognizing fulfillment costs as assets will have on our Consolidated Financial Statements.
|
ASU 2016-02,
Leases (Topic 842)
|
|
This standard requires a lessee to recognize leases on its balance sheet by recording a lease liability representing the obligation to make future lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. A lessee is permitted to make an election not to recognize lease assets and liabilities for leases with a term of 12 months or less. The standard also modifies the definition of a lease and requires expanded disclosures. This guidance may be early adopted, and must be adopted using a modified retrospective approach with certain available practical expedients.
|
|
January 1, 2019
|
|
We continue to evaluate the effect of this standard on our Consolidated Financial Statements. Preliminarily, we expect that the requirement to recognize all leases on our Consolidated Balance Sheets will be a significant change from current practice but will not have a material impact upon our Consolidated Balance Sheets. Because this assessment is preliminary and the accounting for leases is subject to significant judgment, this conclusion could change as we finalize our assessment. We have not yet determined the impact of the adoption of this standard upon our results of operations or cash flows, whether we will elect to early adopt this standard or which, if any, practical expedients we will elect upon transition.
|
ASU 2016-16,
Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory
|
|
This standard requires the immediate recognition of the tax consequences of intercompany asset transfers other than inventory. This guidance may be early adopted, but only at the beginning of an annual period, and must be adopted using a modified retrospective approach.
|
|
January 1, 2018
|
|
We are currently evaluating the impact of the provisions of this guidance on our Consolidated Financial Statements and related disclosures.
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||
December 31, 2016
|
|||||||||||||||
(in thousands)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Parent Issuer
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
197,201
|
|
|
—
|
|
|
—
|
|
|
197,201
|
|
||||
Advances to affiliate
|
—
|
|
|
20,108
|
|
|
—
|
|
|
20,108
|
|
||||
Other current assets
|
152
|
|
|
37,043
|
|
|
—
|
|
|
37,195
|
|
||||
Other current assets—affiliate
|
—
|
|
|
142
|
|
|
(1
|
)
|
|
141
|
|
||||
Total current assets
|
197,353
|
|
|
57,293
|
|
|
(1
|
)
|
|
254,645
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Non-current restricted cash
|
73,339
|
|
|
—
|
|
|
—
|
|
|
73,339
|
|
||||
Property, plant and equipment, net
|
306,342
|
|
|
5,770,330
|
|
|
—
|
|
|
6,076,672
|
|
||||
Debt issuance and deferred financing costs, net
|
155,847
|
|
|
—
|
|
|
—
|
|
|
155,847
|
|
||||
Investments in subsidiaries
|
5,927,833
|
|
|
—
|
|
|
(5,927,833
|
)
|
|
—
|
|
||||
Non-current advances under long-term contracts
|
—
|
|
|
46,398
|
|
|
—
|
|
|
46,398
|
|
||||
Other non-current assets, net
|
50
|
|
|
29,497
|
|
|
—
|
|
|
29,547
|
|
||||
Total assets
|
$
|
6,660,764
|
|
|
$
|
5,903,518
|
|
|
$
|
(5,927,834
|
)
|
|
$
|
6,636,448
|
|
|
|
|
|
|
|
|
|
||||||||
LIABILITIES AND MEMBER’S EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
332
|
|
|
$
|
8,788
|
|
|
$
|
—
|
|
|
$
|
9,120
|
|
Accrued liabilities
|
61,328
|
|
|
76,320
|
|
|
—
|
|
|
137,648
|
|
||||
Due to affiliates
|
—
|
|
|
7,050
|
|
|
—
|
|
|
7,050
|
|
||||
Derivative liabilities
|
43,383
|
|
|
—
|
|
|
—
|
|
|
43,383
|
|
||||
Total current liabilities
|
105,043
|
|
|
92,158
|
|
|
—
|
|
|
197,201
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Long-term debt, net
|
5,081,715
|
|
|
—
|
|
|
—
|
|
|
5,081,715
|
|
||||
Non-current derivative liabilities
|
43,105
|
|
|
—
|
|
|
—
|
|
|
43,105
|
|
||||
Other non-current liabilities—affiliate
|
—
|
|
|
618
|
|
|
—
|
|
|
618
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Member’s equity
|
1,430,901
|
|
|
5,810,742
|
|
|
(5,927,834
|
)
|
|
1,313,809
|
|
||||
Total liabilities and member’s equity
|
$
|
6,660,764
|
|
|
$
|
5,903,518
|
|
|
$
|
(5,927,834
|
)
|
|
$
|
6,636,448
|
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||
Three Months Ended June 30, 2017
|
|||||||||||||||
(in thousands)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Parent Issuer
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Operating and maintenance expense
|
—
|
|
|
858
|
|
|
—
|
|
|
858
|
|
||||
Operating and maintenance expense—affiliate
|
—
|
|
|
96
|
|
|
—
|
|
|
96
|
|
||||
Development expense
|
—
|
|
|
323
|
|
|
—
|
|
|
323
|
|
||||
General and administrative expense
|
329
|
|
|
1,219
|
|
|
—
|
|
|
1,548
|
|
||||
General and administrative expense—affiliate
|
—
|
|
|
153
|
|
|
—
|
|
|
153
|
|
||||
Depreciation and amortization expense
|
—
|
|
|
155
|
|
|
—
|
|
|
155
|
|
||||
Other
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Total expenses
|
329
|
|
|
2,809
|
|
|
—
|
|
|
3,138
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(329
|
)
|
|
(2,809
|
)
|
|
—
|
|
|
(3,138
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Loss on early extinguishment of debt
|
(32,480
|
)
|
|
—
|
|
|
—
|
|
|
(32,480
|
)
|
||||
Derivative loss, net
|
(33,096
|
)
|
|
—
|
|
|
—
|
|
|
(33,096
|
)
|
||||
Other income (expense)
|
(45
|
)
|
|
2,958
|
|
|
(2,957
|
)
|
|
(44
|
)
|
||||
Total other income (expense)
|
(65,621
|
)
|
|
2,958
|
|
|
(2,957
|
)
|
|
(65,620
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(65,950
|
)
|
|
$
|
149
|
|
|
$
|
(2,957
|
)
|
|
$
|
(68,758
|
)
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||
Three Months Ended June 30, 2016
|
|||||||||||||||
(in thousands)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Parent Issuer
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Operating and maintenance expense
|
—
|
|
|
321
|
|
|
—
|
|
|
321
|
|
||||
Operating and maintenance expense—affiliate
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
||||
Development expense recovery
|
—
|
|
|
(52
|
)
|
|
—
|
|
|
(52
|
)
|
||||
Development expense—affiliate
|
—
|
|
|
58
|
|
|
—
|
|
|
58
|
|
||||
General and administrative expense
|
227
|
|
|
775
|
|
|
—
|
|
|
1,002
|
|
||||
General and administrative expense—affiliate
|
—
|
|
|
274
|
|
|
—
|
|
|
274
|
|
||||
Depreciation and amortization expense
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
||||
Total expenses
|
227
|
|
|
1,445
|
|
|
—
|
|
|
1,672
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(227
|
)
|
|
(1,445
|
)
|
|
—
|
|
|
(1,672
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Loss on early extinguishment of debt
|
(29,011
|
)
|
|
—
|
|
|
—
|
|
|
(29,011
|
)
|
||||
Derivative loss, net
|
(75,877
|
)
|
|
—
|
|
|
—
|
|
|
(75,877
|
)
|
||||
Other income (expense)
|
(26
|
)
|
|
1
|
|
|
—
|
|
|
(25
|
)
|
||||
Total other income (expense)
|
(104,914
|
)
|
|
1
|
|
|
—
|
|
|
(104,913
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(105,141
|
)
|
|
$
|
(1,444
|
)
|
|
$
|
—
|
|
|
$
|
(106,585
|
)
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||
Six Months Ended June 30, 2017
|
|||||||||||||||
(in thousands)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Parent Issuer
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Operating and maintenance expense
|
—
|
|
|
1,564
|
|
|
—
|
|
|
1,564
|
|
||||
Operating and maintenance expense—affiliate
|
—
|
|
|
149
|
|
|
—
|
|
|
149
|
|
||||
Development expense
|
—
|
|
|
415
|
|
|
—
|
|
|
415
|
|
||||
Development expense—affiliate
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
General and administrative expense
|
640
|
|
|
2,323
|
|
|
—
|
|
|
2,963
|
|
||||
General and administrative expense—affiliate
|
—
|
|
|
464
|
|
|
—
|
|
|
464
|
|
||||
Depreciation and amortization expense
|
—
|
|
|
289
|
|
|
—
|
|
|
289
|
|
||||
Other
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Total expenses
|
640
|
|
|
5,217
|
|
|
—
|
|
|
5,857
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(640
|
)
|
|
(5,217
|
)
|
|
—
|
|
|
(5,857
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Loss on early extinguishment of debt
|
(32,480
|
)
|
|
—
|
|
|
—
|
|
|
(32,480
|
)
|
||||
Derivative loss, net
|
(32,096
|
)
|
|
—
|
|
|
—
|
|
|
(32,096
|
)
|
||||
Other income (expense)
|
(85
|
)
|
|
7,818
|
|
|
(7,815
|
)
|
|
(82
|
)
|
||||
Total other income (expense)
|
(64,661
|
)
|
|
7,818
|
|
|
(7,815
|
)
|
|
(64,658
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(65,301
|
)
|
|
$
|
2,601
|
|
|
$
|
(7,815
|
)
|
|
$
|
(70,515
|
)
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||
Six Months Ended June 30, 2016
|
|||||||||||||||
(in thousands)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Parent Issuer
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Operating and maintenance expense
|
—
|
|
|
537
|
|
|
—
|
|
|
537
|
|
||||
Operating and maintenance expense—affiliate
|
—
|
|
|
20
|
|
|
—
|
|
|
20
|
|
||||
Development expense recovery
|
—
|
|
|
(184
|
)
|
|
—
|
|
|
(184
|
)
|
||||
Development expense recovery—affiliate
|
—
|
|
|
(120
|
)
|
|
—
|
|
|
(120
|
)
|
||||
General and administrative expense
|
334
|
|
|
1,443
|
|
|
—
|
|
|
1,777
|
|
||||
General and administrative expense—affiliate
|
—
|
|
|
291
|
|
|
—
|
|
|
291
|
|
||||
Depreciation and amortization expense
|
—
|
|
|
84
|
|
|
—
|
|
|
84
|
|
||||
Total expenses
|
334
|
|
|
2,071
|
|
|
—
|
|
|
2,405
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(334
|
)
|
|
(2,071
|
)
|
|
—
|
|
|
(2,405
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Loss on early extinguishment of debt
|
(29,011
|
)
|
|
—
|
|
|
—
|
|
|
(29,011
|
)
|
||||
Derivative loss, net
|
(236,053
|
)
|
|
—
|
|
|
—
|
|
|
(236,053
|
)
|
||||
Other income (expense)
|
(3
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
Total other income (expense)
|
(265,067
|
)
|
|
3
|
|
|
—
|
|
|
(265,064
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(265,401
|
)
|
|
$
|
(2,068
|
)
|
|
$
|
—
|
|
|
$
|
(267,469
|
)
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||
Six Months Ended June 30, 2017
|
|||||||||||||||
(in thousands)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Parent Issuer
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(65,301
|
)
|
|
$
|
2,601
|
|
|
$
|
(7,815
|
)
|
|
$
|
(70,515
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense
|
—
|
|
|
289
|
|
|
—
|
|
|
289
|
|
||||
Allowance for funds used during construction
|
—
|
|
|
(7,815
|
)
|
|
7,815
|
|
|
—
|
|
||||
Loss on early extinguishment of debt
|
32,480
|
|
|
—
|
|
|
—
|
|
|
32,480
|
|
||||
Total losses on derivatives, net
|
32,096
|
|
|
383
|
|
|
—
|
|
|
32,479
|
|
||||
Net cash used for settlement of derivative instruments
|
(33,720
|
)
|
|
—
|
|
|
—
|
|
|
(33,720
|
)
|
||||
Other
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued liabilities
|
128
|
|
|
29
|
|
|
—
|
|
|
157
|
|
||||
Due to affiliates
|
115
|
|
|
611
|
|
|
—
|
|
|
726
|
|
||||
Other, net
|
(293
|
)
|
|
(754
|
)
|
|
—
|
|
|
(1,047
|
)
|
||||
Other, net—affiliate
|
—
|
|
|
(636
|
)
|
|
—
|
|
|
(636
|
)
|
||||
Net cash used in operating activities
|
(34,495
|
)
|
|
(5,287
|
)
|
|
—
|
|
|
(39,782
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
||||||||
Property, plant and equipment, net
|
(202,665
|
)
|
|
(1,179,753
|
)
|
|
—
|
|
|
(1,382,418
|
)
|
||||
Investments in subsidiaries
|
(1,152,649
|
)
|
|
—
|
|
|
1,152,649
|
|
|
—
|
|
||||
Other
|
—
|
|
|
32,391
|
|
|
—
|
|
|
32,391
|
|
||||
Net cash used in investing activities
|
(1,355,314
|
)
|
|
(1,147,362
|
)
|
|
1,152,649
|
|
|
(1,350,027
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
||||||||
Proceeds from issuances of debt
|
2,497,000
|
|
|
—
|
|
|
—
|
|
|
2,497,000
|
|
||||
Repayments of debt
|
(1,436,050
|
)
|
|
—
|
|
|
—
|
|
|
(1,436,050
|
)
|
||||
Debt issuance and deferred financing costs
|
(22,401
|
)
|
|
—
|
|
|
—
|
|
|
(22,401
|
)
|
||||
Capital contributions
|
184,039
|
|
|
1,152,806
|
|
|
(1,152,806
|
)
|
|
184,039
|
|
||||
Distributions
|
—
|
|
|
(157
|
)
|
|
157
|
|
|
—
|
|
||||
Other
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
||||
Net cash provided by financing activities
|
1,222,559
|
|
|
1,152,649
|
|
|
(1,152,649
|
)
|
|
1,222,559
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net decrease in cash, cash equivalents and restricted cash
|
(167,250
|
)
|
|
—
|
|
|
—
|
|
|
(167,250
|
)
|
||||
Cash, cash equivalents and restricted cash—beginning of period
|
270,540
|
|
|
—
|
|
|
—
|
|
|
270,540
|
|
||||
Cash, cash equivalents and restricted cash—end of period
|
$
|
103,290
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
103,290
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||
Six Months Ended June 30, 2016
|
|||||||||||||||
(in thousands)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Parent Issuer
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(265,401
|
)
|
|
$
|
(2,068
|
)
|
|
$
|
—
|
|
|
$
|
(267,469
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense
|
—
|
|
|
84
|
|
|
—
|
|
|
84
|
|
||||
Loss on early extinguishment of debt
|
29,011
|
|
|
—
|
|
|
—
|
|
|
29,011
|
|
||||
Total losses on derivatives, net
|
236,053
|
|
|
—
|
|
|
—
|
|
|
236,053
|
|
||||
Net cash used for settlement of derivative instruments
|
(13,710
|
)
|
|
—
|
|
|
—
|
|
|
(13,710
|
)
|
||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued liabilities
|
97
|
|
|
664
|
|
|
—
|
|
|
761
|
|
||||
Due to affiliates
|
5
|
|
|
(443
|
)
|
|
—
|
|
|
(438
|
)
|
||||
Other, net
|
(350
|
)
|
|
(1,000
|
)
|
|
—
|
|
|
(1,350
|
)
|
||||
Other, net—affiliate
|
—
|
|
|
149
|
|
|
—
|
|
|
149
|
|
||||
Net cash used in operating activities
|
(14,295
|
)
|
|
(2,614
|
)
|
|
—
|
|
|
(16,909
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
||||||||
Property, plant and equipment, net
|
(64,673
|
)
|
|
(966,929
|
)
|
|
—
|
|
|
(1,031,602
|
)
|
||||
Investments in subsidiaries
|
(984,849
|
)
|
|
—
|
|
|
984,849
|
|
|
—
|
|
||||
Other
|
—
|
|
|
(15,306
|
)
|
|
—
|
|
|
(15,306
|
)
|
||||
Net cash used in investing activities
|
(1,049,522
|
)
|
|
(982,235
|
)
|
|
984,849
|
|
|
(1,046,908
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
||||||||
Proceeds from issuances of debt
|
2,318,000
|
|
|
—
|
|
|
—
|
|
|
2,318,000
|
|
||||
Repayments of debt
|
(1,050,660
|
)
|
|
—
|
|
|
—
|
|
|
(1,050,660
|
)
|
||||
Debt issuance and deferred financing costs
|
(27,166
|
)
|
|
—
|
|
|
—
|
|
|
(27,166
|
)
|
||||
Capital contributions
|
—
|
|
|
984,849
|
|
|
(984,849
|
)
|
|
—
|
|
||||
Other
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
||||
Net cash provided by financing activities
|
1,240,164
|
|
|
984,849
|
|
|
(984,849
|
)
|
|
1,240,164
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net increase in cash, cash equivalents and restricted cash
|
176,347
|
|
|
—
|
|
|
—
|
|
|
176,347
|
|
||||
Cash, cash equivalents and restricted cash—beginning of period
|
46,770
|
|
|
—
|
|
|
—
|
|
|
46,770
|
|
||||
Cash, cash equivalents and restricted cash—end of period
|
$
|
223,117
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
223,117
|
|
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;
|
•
|
statements regarding future levels of domestic and international natural gas production, supply or consumption or future levels of LNG imports into or 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 our ability to enter into such transactions;
|
•
|
statements relating to the construction of our Trains and pipeline, including statements concerning the engagement of any EPC contractor or other contractor and the anticipated terms and provisions of any agreement with any such 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 natural gas 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 and pipeline, 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, capital expenditures, maintenance and operating costs and cash flows, 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-historical 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
|
|
June 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash designated for the Liquefaction Project
|
103,290
|
|
|
270,540
|
|
||
Available commitments under the following credit facilities:
|
|
|
|
||||
2015 CCH Credit Facility (“2015 CCH Credit Facility”)
|
2,629,714
|
|
|
3,602,714
|
|
||
$350 million CCH Working Capital Facility (“CCH Working Capital Facility”)
|
267,839
|
|
|
350,000
|
|
|
Stage 1
|
|
Overall project completion percentage
|
67.9%
|
|
Project completion percentage of:
|
|
|
Engineering
|
100%
|
|
Procurement
|
87.8%
|
|
Subcontract work
|
39.2%
|
|
Construction
|
41.0%
|
|
Expected date of substantial completion
|
Train 1
|
1H 2019
|
|
Train 2
|
2H 2019
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||||
Senior notes (1)
|
|
$
|
4,250,000
|
|
|
$
|
2,750,000
|
|
Credit facilities outstanding balance (2)
|
|
1,941,737
|
|
|
2,380,788
|
|
||
Letters of credit issued (2)
|
|
82,161
|
|
|
—
|
|
||
Available commitments under credit facilities (2)
|
|
2,897,553
|
|
|
3,952,714
|
|
||
Total capital resources from borrowings and available commitments
|
|
$
|
9,171,451
|
|
|
$
|
9,083,502
|
|
|
(1)
|
Includes 7.000% Senior Secured Notes due 2024
(the “2024 CCH Senior Notes”)
, 5.875% Senior Secured Notes due 2025
(the “2025 CCH Senior Notes”)
and
2027 CCH Senior Notes
(collectively, the “CCH Senior Notes”)
.
|
(2)
|
Includes
2015 CCH Credit Facility
and
CCH Working Capital Facility
.
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Operating cash flows
|
$
|
(39,782
|
)
|
|
$
|
(16,909
|
)
|
Investing cash flows
|
(1,350,027
|
)
|
|
(1,046,908
|
)
|
||
Financing cash flows
|
1,222,559
|
|
|
1,240,164
|
|
||
|
|
|
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(167,250
|
)
|
|
176,347
|
|
||
Cash, cash equivalents and restricted cash—beginning of period
|
270,540
|
|
|
46,770
|
|
||
Cash, cash equivalents and restricted cash—end of period
|
$
|
103,290
|
|
|
$
|
223,117
|
|
•
|
$973.0 million of borrowings under the
2015 CCH Credit Facility
;
|
•
|
issuance of aggregate principal amount of
$1.5 billion
of the
2027 CCH Senior Notes
, which was used to prepay $1.4 billion of outstanding borrowings under the
2015 CCH Credit Facility
;
|
•
|
$24.0 million of borrowings and $24.0 million of repayments made under the
CCH Working Capital Facility
;
|
•
|
$22.4 million
of debt issuance and deferred financing costs related to up-front fees paid upon the closing of these transactions; and
|
•
|
$184.0 million
of equity contributions from Cheniere.
|
•
|
$1.1 billion of borrowings under the
2015 CCH Credit Facility
;
|
•
|
issuance of an aggregate principal amount of $1.25 billion of the
2024 CCH Senior Notes
in May 2016, which were use to prepay $1.1 billion of outstanding borrowings under the
2015 CCH Credit Facility
; and
|
•
|
$27.2 million
of debt issuance costs related to up-front fees paid upon the closing of these transactions.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating and maintenance expense
|
858
|
|
|
321
|
|
|
537
|
|
|
1,564
|
|
|
537
|
|
|
1,027
|
|
||||||
Operating and maintenance expense—affiliate
|
96
|
|
|
17
|
|
|
79
|
|
|
149
|
|
|
20
|
|
|
129
|
|
||||||
Development expense (recovery)
|
323
|
|
|
(52
|
)
|
|
375
|
|
|
415
|
|
|
(184
|
)
|
|
599
|
|
||||||
Development expense (recovery)—affiliate
|
—
|
|
|
58
|
|
|
(58
|
)
|
|
8
|
|
|
(120
|
)
|
|
128
|
|
||||||
General and administrative expense
|
1,548
|
|
|
1,002
|
|
|
546
|
|
|
2,963
|
|
|
1,777
|
|
|
1,186
|
|
||||||
General and administrative expense—affiliate
|
153
|
|
|
274
|
|
|
(121
|
)
|
|
464
|
|
|
291
|
|
|
173
|
|
||||||
Depreciation and amortization expense
|
155
|
|
|
52
|
|
|
103
|
|
|
289
|
|
|
84
|
|
|
205
|
|
||||||
Other
|
5
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss from operations
|
$
|
(3,138
|
)
|
|
$
|
(1,672
|
)
|
|
$
|
(1,466
|
)
|
|
$
|
(5,857
|
)
|
|
$
|
(2,405
|
)
|
|
$
|
(3,452
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||
Loss on early extinguishment of debt
|
$
|
32,480
|
|
|
$
|
29,011
|
|
|
$
|
3,469
|
|
|
$
|
32,480
|
|
|
$
|
29,011
|
|
|
$
|
3,469
|
|
Derivative loss, net
|
33,096
|
|
|
75,877
|
|
|
(42,781
|
)
|
|
32,096
|
|
|
236,053
|
|
|
(203,957
|
)
|
||||||
Other expense
|
44
|
|
|
25
|
|
|
19
|
|
|
82
|
|
|
—
|
|
|
82
|
|
||||||
Total other expense
|
$
|
65,620
|
|
|
$
|
104,913
|
|
|
$
|
(39,293
|
)
|
|
$
|
64,658
|
|
|
$
|
265,064
|
|
|
$
|
(200,406
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Fair Value
|
|
Change in Fair Value
|
|
Fair Value
|
|
Change in Fair Value
|
||||||||
Liquefaction Supply Derivatives
|
$
|
(383
|
)
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Fair Value
|
|
Change in Fair Value
|
|
Fair Value
|
|
Change in Fair Value
|
||||||||
Interest Rate Derivatives
|
$
|
(84,864
|
)
|
|
$
|
43,802
|
|
|
$
|
(86,488
|
)
|
|
$
|
52,047
|
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit No.
|
|
Description
|
4.1
|
|
Second Supplemental Indenture, dated as of May 19, 2017, among Cheniere Corpus Christi Holdings, LLC, as issuer, Corpus Christi Liquefaction, LLC, Cheniere Corpus Christi Pipeline, L.P. and Corpus Christi Pipeline GP, LLC, as guarantors, and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (SEC File No. 333-215435), filed on May 19, 2017)
|
4.2
|
|
Form of 5.125% Senior Secured Note due 2027 (Included as Exhibit A-1 to Exhibit 4.1 above)
|
10.1*
|
|
Change orders to the Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 1 Liquefaction Facility, dated as of December 6, 2013, between Corpus Christi Liquefaction, LLC and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-00034 Condensate Tie-In, Utility Water Tie-In, and Feed Gas Tie-In Relocation, dated April 18, 2017 and (ii) the Change Order CO-00035 Nitrogen Tie-In Relocation, dated April 21, 2017 (Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)
|
10.2
|
|
Registration Rights Agreement, dated as of May 19, 2017, among Cheniere Corpus Christi Holdings, LLC and Corpus Christi Liquefaction, LLC, Cheniere Corpus Christi Pipeline, L.P. and Corpus Christi Pipeline GP, LLC, as guarantors, and RBC Capital Markets, LLC, for itself and as representative of the purchasers (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 333-215435), filed on May 19, 2017)
|
31.1*
|
|
Certification by Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
|
32.1**
|
|
Certification by 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.
|
|
|
CHENIERE CORPUS CHRISTI HOLDINGS, LLC
|
|
|
|
|
|
Date:
|
August 7, 2017
|
By:
|
/s/ Michael J. Wortley
|
|
|
|
Michael J. Wortley
|
|
|
|
President and Chief Financial Officer
|
|
|
|
(on behalf of the registrant and
as principal financial officer) |
|
|
|
|
Date:
|
August 7, 2017
|
By:
|
/s/ Leonard Travis
|
|
|
|
Leonard Travis
|
|
|
|
Chief Accounting Officer
|
|
|
|
(on behalf of the registrant and
as principal accounting officer) |
PROJECT NAME:
Corpus Christi Stage 1 Liquefaction Facility
OWNER:
Corpus Christi Liquefaction, LLC
CONTRACTOR:
Bechtel Oil, Gas and Chemicals, Inc.
DATE OF AGREEMENT: December 6, 2013
|
CHANGE ORDER NUMBER:
CO-00034
DATE OF CHANGE ORDER:
April 18, 2017
|
1.
|
Per Article 6.1.B of the Agreement, Parties agree to implement changes to the Condensate Tie-In, Utility Water Tie-In, and due to the Feed Gas Tie-In Relocation.
|
2.
|
The scope of this Change Order is as detailed in Exhibit A.
|
3.
|
The cost breakdowns for the scopes of work noted above in this Change Order are detailed in Exhibit B. These costs are as detailed on Trend no.’s: S1-1228 (dated 06 Mar. 2017), S1-2003 (dated 06 Mar. 2017) and S1-2004 (dated 27 Mar. 2017)
|
4.
|
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.
|
|
$
|
7,080,830,000
|
|
Net change by previously authorized Change Orders (0001-00033)
|
$
|
705,808,621
|
|
The Contract Price prior to this Change Order was
|
$
|
7,786,638,621
|
|
The Aggregate Equipment Price will be changed by this Change Order in the amount of
|
$
|
***
|
|
The Aggregate Labor and Skills Price will be changed by this Change Order in the amount of
|
$
|
***
|
|
The new Contract Price including this Change Order will be
|
$
|
7,791,063,472
|
|
The original Aggregate Equipment Price was
|
$
|
***
|
Net change by previously authorized Change Orders (0001-00033)
|
$
|
***
|
The Aggregate Equipment Price prior to this Change Order was
|
$
|
***
|
The Aggregate Equipment Price will be changed by this Change Order in the amount of
|
$
|
***
|
The new Aggregate Equipment Price including this Change Order will be
|
$
|
***
|
The original Aggregate Labor and Skills Price was
|
$
|
***
|
Net change by previously authorized Change Orders (0001-00033)
|
$
|
***
|
The Aggregate Labor and Skills Price prior to this Change Order was
|
$
|
***
|
The Aggregate Labor and Skills Price will be changed by this Change Order in the amount of
|
$
|
***
|
The new Aggregate Labor and Skills Price including this Change Order will be
|
$
|
***
|
The original Aggregate Provisional Sum was
|
$
|
950,561,351
|
|
Net change by previously authorized Change Orders (0001-00033)
|
$
|
(745,966,926
|
)
|
The Aggregate Provisional Sum prior to this Change Order was
|
$
|
204,594,425
|
|
The Aggregate Provisional Sum will be changed by this Change Order in the amount of
|
$
|
—
|
|
The new Aggregate Provisional Sum including this Change Order will be
|
$
|
204,594,425
|
|
/s/ Ed Lehotsky
|
|
/s/ Sergio Buoncristiano
|
Owner
|
|
Contractor
|
Ed Lehotsky
|
|
Sergio Buoncristiano
|
Name
|
|
Name
|
Sr. VP LNG E&C
|
|
SVP
|
Title
|
|
Title
|
April 25, 2017
|
|
April 19, 2017
|
Date of Signing
|
|
Date of Signing
|
PROJECT NAME:
Corpus Christi Stage 1 Liquefaction Facility
OWNER:
Corpus Christi Liquefaction, LLC
CONTRACTOR:
Bechtel Oil, Gas and Chemicals, Inc.
DATE OF AGREEMENT: December 6, 2013
|
CHANGE ORDER NUMBER:
CO-00035
DATE OF CHANGE ORDER:
April 21, 2017
|
1.
|
Per Article 6.1.B of the Agreement, Parties agree to implement changes due to the Nitrogen Tie-In Relocation.
|
2.
|
The scope of this Change Order is as detailed in Exhibit A.
|
3.
|
The cost breakdowns for the scopes of work noted above in this Change Order are detailed in Exhibit B. These costs are as detailed on Trend no: S1-2009 (dated 13 Apr. 2017).
|
4.
|
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.
|
|
$
|
7,080,830,000
|
|
Net change by previously authorized Change Orders (0001-00034)
|
$
|
710,233,472
|
|
The Contract Price prior to this Change Order was
|
$
|
7,791,063,472
|
|
The Aggregate Equipment Price will be changed by this Change Order in the amount of
|
$
|
***
|
|
The Aggregate Labor and Skills Price will be changed by this Change Order in the amount of
|
$
|
***
|
|
The new Contract Price including this Change Order will be
|
$
|
7,793,096,937
|
|
The original Aggregate Equipment Price was
|
$
|
***
|
Net change by previously authorized Change Orders (0001-00034)
|
$
|
***
|
The Aggregate Equipment Price prior to this Change Order was
|
$
|
***
|
The Aggregate Equipment Price will be changed by this Change Order in the amount of
|
$
|
***
|
The new Aggregate Equipment Price including this Change Order will be
|
$
|
***
|
The original Aggregate Labor and Skills Price was
|
$
|
***
|
Net change by previously authorized Change Orders (0001-00034)
|
$
|
***
|
The Aggregate Labor and Skills Price prior to this Change Order was
|
$
|
***
|
The Aggregate Labor and Skills Price will be changed by this Change Order in the amount of
|
$
|
***
|
The new Aggregate Labor and Skills Price including this Change Order will be
|
$
|
***
|
The original Aggregate Provisional Sum was
|
$
|
950,561,351
|
|
Net change by previously authorized Change Orders (0001-00034)
|
$
|
(745,966,926
|
)
|
The Aggregate Provisional Sum prior to this Change Order was
|
$
|
204,594,425
|
|
The Aggregate Provisional Sum will be changed by this Change Order in the amount of
|
$
|
—
|
|
The new Aggregate Provisional Sum including this Change Order will be
|
$
|
204,594,425
|
|
/s/ Ed Lehotsky
|
|
/s/ Sergio Buoncristiano
|
Owner
|
|
Contractor
|
Ed Lehotsky
|
|
Sergio Buoncristiano
|
Name
|
|
Name
|
Sr. VP LNG E&C
|
|
SVP
|
Title
|
|
Title
|
April 25, 2017
|
|
April 25, 2017
|
Date of Signing
|
|
Date of Signing
|
1.
|
I have reviewed this
quarterly report on Form 10-Q
of Cheniere Corpus Christi Holdings, 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.
|
I am 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.
|
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
|
President and Chief Financial Officer of
|
Cheniere Corpus Christi Holdings, 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
|
President and Chief Financial Officer of
|
Cheniere Corpus Christi Holdings, LLC
|