UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2023~~2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-192373

Sabine Pass Liquefaction, LLC

(Exact name of registrant as specified in its charter)


Delaware			27-3235920
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

~~700~~845 ~~Milam~~Texas ~~Street~~Avenue, Suite ~~1900~~1250

Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

(713) 375-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
None	None	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒☐ No ☐☒

Note: The registrant ~~was~~is a voluntary filer ~~until~~not ~~July~~subject ~~27,~~to ~~2023~~the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934. However, ~~The~~the registrant has filed all reports required pursuant to Sections 13 or 15(d) during the preceding 12 months as if the registrant was subject to such filing requirements.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of the issuer’s classes of common stock, as of the latest practicable date: Not applicable

SABINE PASS LIQUEFACTION, LLC

TABLE OF CONTENTS

	Definitions	1
Part I. Financial Information
Item 1.	Financial Statements	2
	Statements of Operations	2
	Balance Sheets	3
	Statements of Member’s Equity (Deficit)	4
	Statements of Cash Flows	5
	Notes to Financial Statements	6
	Note 1—Nature of Operations and Basis of Presentation	6
	Note 2—Restricted Cash and Cash Equivalents	76
	Note 3—Trade and Other Receivables, Net of Current Expected Credit Losses	7
	Note 4—Inventory	7
	Note 5—Property, Plant and Equipment, Net of Accumulated Depreciation	7
	Note 6—Derivative Instruments	87
	Note 7—Accrued Liabilities	11
	Note 8—Debt	11
	Note 9—Revenues	1312
	Note 10—Related Party Transactions	1514
	Note 11—Customer Concentration	1615
	Note 12—Supplemental Cash Flow Information	1615
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1716
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2322
Item 4.	Controls and Procedures	2322
Part II. Other Information
Item 1.	Legal Proceedings	2423
Item 1A.	Risk Factors	2423
Item 6.	Exhibits	2423
	Signatures	2524

Table of Contents

DEFINITIONS

As used in this quarterly report, the terms listed below have the following meanings:

Common Industry and Other Terms

ASU						Accounting Standards Update
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
ESG						environmental, social and governance
FASB						Financial Accounting Standards Board
FERC						Federal Energy Regulatory Commission
FID						final investment decision
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~~U.S. dollars 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
IPM agreements						integrated production marketing agreements in which the gas producer sells to us gas on a global LNG index price, less a fixed liquefaction fee, shipping and other costs
IPM agreement						integrated production marketing agreement in which the gas producer sells to us gas on a global LNG or natural gas index price, less a fixed liquefaction fee, shipping and other costs
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; one British thermal unit measures the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit
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						U.S. Securities and Exchange Commission
SOFR						Secured Overnight Financing Rate
SPA						LNG sale and purchase agreement
TBtu						trillion British thermal units; one British thermal unit measures the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit
Train						an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
TUA						terminal use agreement

Affiliate Entity Abbreviations


Cheniere						Cheniere Energy, Inc.
Cheniere Investments						Cheniere Energy Investments, LLC
Cheniere Marketing						Cheniere Marketing, LLC and its subsidiaries
CQP						Cheniere Energy Partners, L.P.
Cheniere Terminals						Cheniere LNG Terminals, LLC
CTPL						Cheniere Creole Trail Pipeline, L.P.
SPLNG						Sabine Pass LNG, L.P.

Unless the context requires otherwise, references to “SPL,” the “Company,” “we,” “us” and “our” refer to Sabine Pass Liquefaction, LLC.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SABINE PASS LIQUEFACTION, LLC

STATEMENTS OF OPERATIONS

(in millions)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
			Three Months Ended March 31,
	2023		2022		2023		2022
					2024		2023
Revenues
LNG revenues	$	~~1,564~~	$	~~3,130~~	$	51,~~085~~720	$	82,~~577~~106
LNG revenues—affiliate	~~515~~		~~1,376~~		~~1,745~~524		~~3,268~~761
LNG revenues—related party	—		—		—		4
Total revenues					2,244		2,867
Total revenues	2,079		4,506		6,830		11,849
Operating costs and expenses
Operating costs and expenses (recoveries)
Cost of sales (excluding items shown separately below)					964		313
Cost of sales (excluding items shown separately below)	681		4,739		1,597		10,444
Cost of sales—affiliate					17		33
Cost of sales—affiliate	14		111		59		201
Operating and maintenance expense					173		176
Cost of sales—related party	—		—		—		1
Operating and maintenance expense—affiliate					123		124
Operating and maintenance expense	181		164		590		474
Operating and maintenance expense—related party					13		16
Operating and maintenance expense—affiliate	118		120		362		355
General and administrative expense					1		1
Operating and maintenance expense—related party	14		18		44		45
General and administrative expense—affiliate					15		16
General and administrative expense (recovery)	1		1		3		(1)
Depreciation and amortization expense					139		138
General and administrative expense—affiliate	15		16		46		50
Other					1		—
Depreciation and amortization expense	138		137		415		401
Total operating costs and expenses					1,446		817
Other	2		—		4		—
Income from operations					798		2,050
Total operating costs and expenses	1,164		5,306		3,120		11,970
Income (loss) from operations	915		(800)		3,710		(121)
Other income (expense)
Interest expense, net of capitalized interest	~~(138)~~		~~(169)~~		(~~459~~136)		(~~495~~161)
Loss on modification or extinguishment of debt	(4)		—		(6)		—
Other income, net					3		4
Other income, net	3		3		11		3
Total other expense					(133)		(157)
Total other expense	(139)		(166)		(454)		(492)
Net income					$	665	$	1,893
Net income (loss)	$	776	$	(966)	$	3,256	$	(613)

The accompanying notes are an integral part of these financial statements.

Table of Contents

SABINE PASS LIQUEFACTION, LLC

BALANCE SHEETS

(in millions)

	September 30,		December 31,
	March 31,		December 31,
	2023		2022
	2024		2023
ASSETS	(unaudited)
Current assets
Restricted cash and cash equivalents	$	3559	$	9256
Trade and other receivables, net of current expected credit losses	~~283~~234		~~622~~368
Trade receivables—affiliate	~~167~~157		~~553~~277
Advances to affiliate	~~122~~104		~~151~~75
Inventory	~~111~~114		~~143~~122
Current derivative assets	3437		2430
Margin deposits	—		35
Other current assets, net	19		27
Other current assets, net	45		33
Other current assets—affiliate	22		22
Other current assets—affiliate	22		21
Total current assets	746		977
Total current assets	819		1,674
Property, plant and equipment, net of accumulated depreciation	13,191		13,322
Property, plant and equipment, net of accumulated depreciation	13,446		13,805
Derivative assets	59		40
Debt issuance costs, net of accumulated amortization	9		5
Other non-current assets, net	173		175
Derivative assets	111		28
Total assets	$	14,169	$	14,514
Other non-current assets, net	162		160
LIABILITIES AND MEMBER’S EQUITY
Total assets	$	14,547	$	15,672
LIABILITIES AND MEMBER’S EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	4328	$	2863
Accrued liabilities	~~533~~397		~~1,314~~686
Accrued liabilities—related party	5		65
Current debt, net of discount and debt issuance costs	349		—
Current debt, net of unamortized debt issuance costs	2,145		300
Due to affiliates	4937		8064
Deferred revenue	~~140~~73		~~132~~101
Current derivative liabilities	~~294~~144		~~769~~196
Other current liabilities	2—		—5
Total current liabilities	12,~~415~~829		21,~~329~~420
Long-term debt, net of discount and debt issuance costs	10,059		12,040
Long-term debt, net of unamortized discount and debt issuance costs	8,073		10,063
Derivative liabilities	1,~~731~~566		31,~~024~~531
Other non-current liabilities	5992		782
Other non-current liabilities—affiliate	2120		2021
Member’s equity (deficit)	1,262		(1,748)
Member’s equity	1,589		1,397
Total liabilities and member’s equity (deficit)	$	14,547	$	15,672
Total liabilities and member’s equity	$	14,169	$	14,514

The accompanying notes are an integral part of these financial statements.

Table of Contents

SABINE PASS LIQUEFACTION, LLC

STATEMENTS OF MEMBER’S EQUITY (DEFICIT)

(in millions)

(unaudited)

Three and Nine Months Ended September 30, 2023
Three Months Ended March 31, 2024
	Sabine Pass LNG-LP, LLC		Total Member’s ~~Deficit~~Equity
Balance at December 31, 2022	$	(1,748)	$	(1,748)
Balance at December 31, 2023	$	1,397	$	1,397
Distributions	(622)		(622)
Distributions (excluding the item shown separately below)	(470)		(470)
Net income	1,893		1,893
Non-cash distributions to affiliates for conveyance of property, plant and equipment (see Note 10)	(3)		(3)
Balance at March 31, 2023	(477)		(477)
Net income	665		665
Non-cash contributions related to extinguishment of debt	1		1
Balance at March 31, 2024	$	1,589	$	1,589
Distributions	(275)		(275)
Net income	587		587
Balance at June 30, 2023	(164)		(164)
Contributions (excluding items shown separately below)	1,190		1,190
Non-cash contributions related to extinguishment of debt	1		1
Non-cash distributions to affiliates	(4)		(4)
Distributions	(537)		(537)
Net income	776		776
Balance at September 30, 2023	$	1,262	$	1,262

Three and Nine Months Ended September 30, 2022
Three Months Ended March 31, 2023
	Sabine Pass LNG-LP, LLC		Total Member’s ~~Equity (~~Deficit)
Balance at December 31, 2021	$	1,621	$	1,621
Balance at December 31, 2022	$	(1,748)	$	(1,748)
Novated IPM agreement (see Note 12)	(2,712)		(2,712)
Distributions	(622)		(622)
Distributions	(563)		(563)
Net income	1,893		1,893
Net income	85		85
Balance at March 31, 2023	$	(477)	$	(477)
Balance at March 31, 2022	(1,569)		(1,569)
Distributions	(588)		(588)
Net income	268		268
Balance at June 30, 2022	(1,889)		(1,889)
Distributions	(549)		(549)
Net loss	(966)		(966)
Balance at September 30, 2022	$	(3,404)	$	(3,404)

The accompanying notes are an integral part of these financial statements.

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SABINE PASS LIQUEFACTION, LLC

STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2023		2022
	2024		2023
Cash flows from operating activities
Net income (loss)	$	3,256	$	(613)
Net income	$	665	$	1,893
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	~~415~~139		~~401~~138
Amortization of debt issuance costs, premium and discount	16		18
Amortization of discount and debt issuance costs	5		6
Loss on modification or extinguishment of debt	6		—
Total gains on derivative instruments, net	(55)		(1,260)
Total losses (gains) on derivative instruments, net	(1,867)		2,447
Net cash provided by (used for) settlement of derivative instruments	12		(11)
Net cash provided by (used for) settlement of derivative instruments	6		(54)
Other	1		6
Changes in operating assets and liabilities:
Trade and other receivables, net of current expected credit losses	339		(292)
Trade and other receivables	134		357
Trade receivables—affiliate	~~386~~120		~~(235)~~290
Advances to affiliate	25(29)		118
Inventory	328		~~(67)~~11
Margin deposits	35		(52)
Accounts payable and accrued liabilities	(320)		(615)
Accounts payable and accrued liabilities	(698)		575
Accrued liabilities—related party	—		(2)
Accrued liabilities—related party	(2)		5
Due to affiliates	(26)		(40)
Due to affiliates	(28)		(1)
Total deferred revenue	(20)		(60)
Total deferred revenue	60		8
Other, net	5		53
Other, net	(10)		(8)
Other, net—affiliate	—		(1)
Other, net—affiliate	(1)		3
Net cash provided by operating activities	638		777
Net cash provided by operating activities	1,971		2,142
Cash flows from investing activities
Property, plant and equipment, net	(~~123~~15)		(~~345~~82)
Other	~~(6)~~—		—(5)
Net cash used in investing activities	(~~129~~15)		(~~345~~87)
Cash flows from financing activities
Redemptions and repayments of debt	(1,650)		—
Repayments of debt	(150)		—
Debt issuance and other financing costs	(4)		—
Distributions	(470)		(622)
Debt extinguishment costs	(1)		—
Net cash used in financing activities	(620)		(622)
Contributions	1,190		—
Net increase in restricted cash and cash equivalents	3		68
Distributions	(1,434)		(1,700)
Restricted cash and cash equivalents—beginning of period	56		92
Net cash used in financing activities	(1,899)		(1,700)
Restricted cash and cash equivalents—end of period	$	59	$	160
Net increase (decrease) in restricted cash and cash equivalents	(57)		97
Restricted cash and cash equivalents—beginning of period	92		98
Restricted cash and cash equivalents—end of period	$	35	$	195

The accompanying notes are an integral part of these financial statements.

Table of Contents

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS

(unaudited)

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

We are a Delaware limited liability company formed by CQP and based in Houston with one member, Sabine Pass LNG-LP, LLC, an indirect wholly owned subsidiary of CQP. We and SPLNG are each indirect wholly owned subsidiaries of Cheniere Investments, which is a wholly owned subsidiary of CQP, a publicly traded limited partnership (NYSE MKT: CQP). CQP is a 48.6% owned subsidiary of Cheniere, a Houston-based energy company primarily engaged in LNG-related businesses. Cheniere also owns 100% of the general partner interest in CQP through ownership in Cheniere Energy Partners GP, LLC.

The natural gas liquefaction and export facility located in Cameron Parish, Louisiana at Sabine Pass (the “Sabine Pass LNG Terminal”) has six operational Trains, for a total production capacity of approximately 30 mtpa of LNG (the “Liquefaction Project”). The Sabine Pass LNG Terminal also has operational regasification facilities owned by SPLNG.

WeAnother ~~have~~subsidiary ~~increased available liquefaction capacity at our Liquefaction Project as a result~~ of ~~debottlenecking~~CQP ~~and~~is ~~other~~pursuing ~~optimization~~an ~~projects. We~~expansion ~~hold~~project ato ~~significant~~provide ~~land~~additional ~~position~~liquefaction capacity at the Sabine Pass LNG Terminal, ~~which provides opportunity for further liquefaction capacity expansion. In May 2023, we~~ and ~~another~~it ~~subsidiary~~has ofcommenced ~~CQP~~commercialization ~~entered~~to ~~the~~support ~~pre-filing review process with~~ the ~~FERC~~additional ~~under~~liquefaction ~~the~~capacity ~~National~~associated ~~Environmental Policy Act for an expansion adjacent to the Liquefaction Project~~ with athis potential ~~production capacity of up to 20 mtpa of LNG. This~~ expansion ~~may be developed and constructed by an affiliate of ours outside of the Liquefaction Project~~project. The development of this site or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before we make a positive final investment decision.

We do not have employees and thus we have various services agreements with affiliates of Cheniere in the ordinary course of business, including services required to construct, operate and maintain the Liquefaction Project, and administrative services. See Note 10—Related Party Transactions for additional details of the activity under these services agreements during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023.

Basis of Presentation

The accompanying unaudited Financial Statements of SPL have been prepared in accordance with GAAP for interim financial information and in accordance with Rule 10-01 of Regulation S-X and reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the financial results for the interim periods presented. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Financial Statements and accompanying notes included in our annual report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023.

Results of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, ~~2023~~2024.

We are a disregarded entity for federal and state income tax purposes. Our taxable income or loss is included in the federal income tax return of CQP, a publicly traded partnership which indirectly owns us. CQP is not subject to federal or state income taxes, as its partners are taxed individually on their allocable share of CQP’s taxable income. Accordingly, no provision or liability for federal or state income taxes is included in the accompanying Financial Statements.

Recent Accounting Standards

ASU ~~2020~~2023-0407

In ~~March~~November ~~2020~~2023, the FASB issued ASU ~~2020~~No. 2023-0407, ~~Reference~~Segment ~~Rate~~Reporting ~~Reform~~ (Topic ~~848~~280):. This ~~Facilitation~~guidance ofrequires ~~the~~a ~~Effects~~public ofentity, ~~Reference~~including ~~Rate~~entities ~~Reform~~with ona ~~Financial~~single ~~Reporting. This~~reportable ~~guidance~~segment, ~~primarily~~to ~~provides~~disclose ~~temporary~~significant ~~optional~~segment ~~expedients~~expenses ~~which~~and ~~simplify~~other ~~the~~segment ~~accounting~~items ~~for~~on ~~contract~~an ~~modifications~~annual toand ~~existing~~interim ~~debt~~basis ~~agreements~~and asprovide in interim periods all disclosures about a ~~result~~reportable ofsegment’s ~~the~~profit ~~market~~or ~~transition~~loss ~~from~~and ~~LIBOR~~assets tothat ~~alternative~~are ~~reference~~currently ~~rates~~required annually. ~~The~~We ~~temporary~~plan ~~optional~~to ~~expedients~~adopt ~~under~~this ~~the~~guidance ~~standard~~and ~~became~~conform ~~effective~~with ~~March~~the ~~12,~~applicable ~~2020~~disclosures ~~and~~retrospectively ~~will~~when beit ~~available~~becomes ~~until~~mandatorily ~~December~~effective ~~31,~~for ~~2024~~our ~~following~~annual areport ~~subsequent~~for ~~amendment~~the toyear ~~the~~ending ~~standard~~December 31, 2024.

NOTE 2—RESTRICTED CASH AND CASH EQUIVALENTS

As of March 31, 2024 and December 31, 2023, we had $59 million and $56 million of restricted cash and cash equivalents, respectively, for which the usage or withdrawal of such cash is contractually or legally restricted to the payment of liabilities related to the Liquefaction Project as required under certain debt arrangements.

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SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

As further detailed in Note 8—Debt, our existing credit facility includes a variable interest rate indexed to SOFR, incorporated through a replacement of the previous credit facility subsequent to the effective date of ASU 2020-04. We elected to apply the optional expedients as applicable; however, the impact of applying the optional expedients was not material, and the transition to SOFR did not have a material impact on our cash flows.

NOTE 2—RESTRICTED CASH AND CASH EQUIVALENTS

As of September 30, 2023 and December 31, 2022, we had $35 million and $92 million of restricted cash and cash equivalents, respectively, for which the usage or withdrawal of such cash is restricted to the payment of liabilities related to the Liquefaction Project as required under certain debt arrangements.

NOTE 3—TRADE AND OTHER RECEIVABLES, NET OF CURRENT EXPECTED CREDIT LOSSES

Trade and other receivables, net of current expected credit losses, consisted of the following (in millions):

	September 30,		December 31,
	March 31,		December 31,
	2023		2022
	2024		2023
Trade receivables	$	~~275~~232	$	~~603~~361
Other receivables	82		197
Total trade and other receivables, net of current expected credit losses	$	~~283~~234	$	~~622~~368

NOTE 4—INVENTORY

Inventory consisted of the following (in millions):

	September 30,		December 31,
	March 31,		December 31,
	2023		2022
	2024		2023
Materials	$	8691	$	8789
LNG	86		2611
Natural gas	16		2822
Other	1		2—
Total inventory	$	~~111~~114	$	~~143~~122

NOTE 5—PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

Property, plant and equipment, net of accumulated depreciation consisted of the following (in millions):

September 30,

December 31,

March 31,

December 31,

2023

2022

2024

2023

LNG terminal

Terminal

16,~~277~~318

16,~~240~~309

Construction-in-process

~~128~~108

~~114~~110

Accumulated depreciation

(23,~~963~~238)

(23,~~553~~100)

Total LNG terminal, net of accumulated depreciation

13,~~442~~188

13,~~801~~319

Fixed assets

2019

Accumulated depreciation

(16)

(1516)

Total fixed assets, net of accumulated depreciation

Property, plant and equipment, net of accumulated depreciation

13,~~446~~191

13,~~805~~322

Depreciation expense was $138 million and $137 million during the three months ended March 31, 2024 and 2023, respectively.

NOTE 6—DERIVATIVE INSTRUMENTS

We have commodity derivatives consisting of natural gas supply contracts, including those under our IPM agreement, for the operation of the Liquefaction Project and expansion project, as well as the associated economic hedges (collectively, the “Liquefaction Supply Derivatives”).

We recognize our derivative instruments as either assets or liabilities and measure those instruments at fair value. None of our derivative instruments are designated as cash flow, fair value or net investment hedging instruments, and changes in fair value are recorded within our Statements of Operations to the extent not utilized for the commissioning process, in which case such changes are capitalized.

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SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The following table shows ~~depreciation~~the ~~expense~~fair ~~and~~value ~~offsets~~of our derivative instruments that are required to ~~LNG~~be ~~terminal~~measured ~~costs~~at fair value on a recurring basis, distinguished by the fair value hierarchy levels prescribed by GAAP (in millions):

			Three Months Ended September 30,								Nine Months Ended September 30,
	Fair Value Measurements as of
			2023				2022				2023				2022
	March 31, 2024																December 31, 2023
Depreciation expense			$	137			$	136			$	411			$	397
	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
Offsets to LNG terminal costs (1)			—				—				—				148
Liquefaction Supply Derivatives asset (liability)	$	18			$	3			$	(1,635)			$	(1,614)			$	18	$	1	$	(1,676)	$	(1,657)

~~(1)~~We ~~recognize~~value ~~offsets to LNG terminal costs related to~~ the ~~sale~~Liquefaction ofSupply ~~commissioning~~Derivatives ~~cargoes~~using ~~because~~a ~~these~~market ~~amounts were earned~~ or ~~loaded~~option-based ~~prior~~approach toincorporating ~~the~~present ~~start~~value oftechniques, ~~commercial~~as ~~operations~~needed, ofwhich ~~the~~incorporates ~~respective~~observable ~~Trains~~commodity ofprice ~~the~~curves, ~~Liquefaction~~when ~~Project~~available, ~~during~~and ~~the~~other ~~testing~~relevant ~~phase for its construction~~data.

~~NOTE 6—DERIVATIVE~~We ~~INSTRUMENTS~~include a significant portion of the Liquefaction Supply Derivatives as Level 3 within the valuation hierarchy as the fair value is developed through the use of internal models which incorporate significant unobservable inputs. In instances where observable data is unavailable, consideration is given to the assumptions that market participants may use in valuing the asset or liability. To the extent valued using an option pricing model, we consider the future prices of energy units for unobservable periods to be a significant unobservable input to estimated net fair value. In estimating the future prices of energy units, we make judgments about market risk related to liquidity of commodity indices and volatility utilizing available market data. Changes in facts and circumstances or additional information may result in revised estimates and judgments, and actual results may differ from these estimates and judgments. We derive our volatility assumptions based on observed historical settled global LNG market pricing or accepted proxies for global LNG market pricing as well as settled domestic natural gas pricing. Such volatility assumptions also contemplate, as of the balance sheet date, observable forward curve data of such indices, as well as evolving available industry data and independent studies.

WeIn ~~have~~developing ~~commodity~~our ~~derivatives~~volatility ~~consisting~~assumptions, ofwe ~~natural~~acknowledge ~~gas~~that the global LNG industry is inherently influenced by events such as unplanned supply ~~contracts~~constraints, geopolitical incidents, unusual climate events including ~~those~~drought ~~under~~and ~~our~~uncommonly ~~IPM~~mild, ~~agreement~~by historical standards, ~~for~~winters ~~the~~and ~~operation~~summers, and real or threatened disruptive operational impacts to global energy infrastructure. Our current estimate of volatility includes the ~~Liquefaction~~impact ~~Project~~of otherwise rare events unless we believe market participants would exclude such events on account of their assertion that those events were specific to our company and ~~associated~~deemed ~~economic~~within ~~hedges~~our ~~(collectively~~control. Our fair value estimates incorporate market participant-based assumptions pertaining to certain contractual uncertainties, including those related to the ~~“Liquefaction~~availability ~~Supply~~of ~~Derivatives”)~~market information for delivery points, as well as the timing of satisfaction of certain events or development of infrastructure to support natural gas gathering and transport. We may recognize changes in fair value through earnings that could significantly impact our results of operations if and when such uncertainties are resolved.

WeThe ~~recognize~~Level ~~our~~3 ~~derivative~~fair ~~instruments~~value asmeasurements ~~either~~of ~~assets~~our ornatural ~~liabilities~~gas ~~and~~positions ~~measure~~within ~~those~~the ~~instruments~~Liquefaction atSupply ~~fair~~Derivatives ~~value. None~~could ofbe ~~our~~materially ~~derivative~~impacted ~~instruments~~by ~~are~~a ~~designated~~significant aschange ~~cash~~in ~~flow~~certain ornatural ~~fair~~gas ~~value hedging instruments,~~ and ~~changes~~international inLNG ~~fair~~prices. The ~~value~~following ~~are~~table ~~recorded~~includes ~~within~~quantitative ~~our~~information ~~Statements~~for ~~of Operations to~~ the ~~extent~~unobservable ~~not~~inputs ~~utilized~~ for the ~~commissioning~~Level ~~process,~~3 inLiquefaction ~~which~~Supply ~~case~~Derivatives ~~such~~as ~~changes~~of ~~are~~March ~~capitalized.~~31, 2024:

The following table shows the fair value of our derivative instruments that are required to be measured at fair value on a recurring basis, by the fair value hierarchy levels prescribed by GAAP (in millions):

Net Fair Value Liability

(in millions)

Valuation Approach

Significant Unobservable Input

Range of Significant Unobservable Inputs / Weighted Average (1)

Liquefaction Supply Derivatives

$(1,635)

Market approach incorporating present value techniques

Henry Hub basis spread

$(0.470) - $0.445 / $0.025

Option pricing model

International LNG pricing spread, relative to Henry Hub (2)

131% - 502% / 220%

	Fair Value Measurements as of
	September 30, 2023								December 31, 2022
	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
Liquefaction Supply Derivatives asset (liability)	$	13	$	(1)	$	(1,892)	$	(1,880)	$	(12)	$	(10)	$	(3,719)	$	(3,741)

(1)Unobservable inputs were weighted by the relative fair value of the instruments.

We(2)Spread ~~value~~contemplates ~~our~~U.S. ~~Liquefaction Supply Derivatives using a market or option~~dollar-~~based~~denominated ~~approach incorporating present value techniques, as needed, which incorporates observable commodity price curves, when available, and other relevant data~~pricing.

~~The~~Increases ~~fair~~or ~~value~~decreases ofin ~~our~~basis ~~Liquefaction~~or ~~Supply~~pricing ~~Derivatives~~spreads, isin ~~predominantly~~isolation, ~~driven~~would bydecrease ~~observable~~or ~~and unobservable market commodity prices and~~increase, ~~as applicable to our natural gas supply contracts~~respectively, ~~our assessment of~~ the ~~associated events deriving~~ fair value ~~including, but not limited to, evaluation~~ of ~~whether~~ the ~~respective~~Liquefaction ~~market~~Supply ~~exists from the perspective of market participants as infrastructure is developed~~Derivatives.

We include a significant portion of our Liquefaction Supply Derivatives as Level 3 within the valuation hierarchy as the fair value is developed through the use of internal models which incorporate significant unobservable inputs. In instances where observable data is unavailable, consideration is given to the assumptions that market participants may use in valuing the asset or liability. To the extent valued using an option pricing model, we consider the future prices of energy units for unobservable periods to be a significant unobservable input to estimated net fair value. In estimating the future prices of energy units, we make judgments about market risk related to liquidity of commodity indices and volatility utilizing available market data. Changes in facts and circumstances or additional information may result in revised estimates and judgments, and actual results may differ from these estimates and judgments. We derive our volatility assumptions based on observed historical settled global LNG market pricing or accepted proxies for global LNG market pricing as well as settled domestic natural gas pricing. Such volatility assumptions also contemplate, as of the balance sheet date, observable forward curve data of such indices, as well as evolving available industry data and independent studies. In developing our volatility assumptions, we acknowledge that the global LNG industry is inherently influenced by events such as unplanned supply constraints, geopolitical incidents, unusual climate events including drought and uncommonly mild, by historical standards, winters and summers, and real or threatened disruptive operational impacts to global energy infrastructure. Our current estimate of volatility does not

Table of Contents

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

~~exclude~~The ~~the~~following ~~impact~~table ofshows ~~otherwise~~the ~~rare~~changes ~~events~~in ~~unless~~the wefair ~~believe~~value ~~market participants would exclude such events on account~~ of ~~their~~the ~~assertion~~Level ~~that~~3 ~~those~~Liquefaction ~~events~~Supply ~~were~~Derivatives ~~specific~~(in ~~to our company and deemed within our control.~~ millions):

The Level 3 fair value measurements of our natural gas positions within our Liquefaction Supply Derivatives could be materially impacted by a significant change in certain natural gas and international LNG prices. The following table includes quantitative information for the unobservable inputs for our Level 3 Liquefaction Supply Derivatives as of September 30, 2023:


	Three Months Ended March 31,
		2024		2023
Balance, beginning of period		$	(1,676)	$	(3,719)
Realized and change in fair value gains (losses) included in net income (1):
Included in cost of sales, existing deals (2)		(2)		1,049
Included in cost of sales, new deals (3)		9		3
Purchases and settlements:
Purchases (4)		—		—
Settlements (5)		34		165


Transfers out of level 3 (6)		—		—
Balance, end of period		$	(1,635)	$	(2,502)
Favorable changes in fair value relating to instruments still held at the end of the period		$	7	$	1,052

Net Fair Value Liability(in millions)

Valuation Approach

Significant Unobservable Input

Range of Significant Unobservable Inputs / Weighted Average (1)

Liquefaction Supply Derivatives

$(1,892)

Market approach incorporating present value techniques

Henry Hub basis spread

$(0.543) - $0.510 / $0.040

Option pricing model

International LNG pricing spread, relative to Henry Hub (2)

103% - 422% / 213%

(1)Unobservable inputs were weighted by the relative fair value of the instruments.

(2)Spread contemplates U.S. dollar-denominated pricing.

Increases or decreases in basis or pricing spreads, in isolation, would decrease or increase, respectively, the fair value of our Liquefaction Supply Derivatives.

The following table shows the changes in the fair value of our Level 3 Liquefaction Supply Derivatives (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Balance, beginning of period	$	(2,255)	$	(3,456)	$	(3,719)	$	38
Realized and change in fair value gains (losses) included in net income (loss) (1):
Included in cost of sales, existing deals (2)	294		(1,545)		1,275		(155)
Included in cost of sales, new deals (3)	8		—		23		—
Purchases and settlements:
Purchases (4)	—		3		—		(4,896)
Settlements (5)	59		(24)		522		(11)
Transfers out of level 3 (6)	2		(2)		7		—
Balance, end of period	$	(1,892)	$	(5,024)	$	(1,892)	$	(5,024)
Favorable (unfavorable) changes in fair value relating to instruments still held at the end of the period	$	302	$	(1,545)	$	1,298	$	(155)

(1)Does not include the realized value associated with derivative instruments that settle through physical delivery, as settlement is equal to contractually fixed price from trade date multiplied by contractual volume. See settlements line item in this table.

(2)Impact to earnings on deals that existed at the beginning of the period and continue to exist at the end of the period.

(3)Impact to earnings on deals that were entered into during the reporting period and continue to exist at the end of the period.

(4)Includes any day one gain (loss) recognized during the reporting period on deals that were entered into during the reporting period which continue to exist at the end of the period, in addition to any derivative contracts acquired from entities at a value other than zero on acquisition date, such as derivatives assigned or novated during the reporting period and continuing to exist at the end of the period.

(5)Roll-off in the current period of amounts recognized in our Balance Sheets at the end of the previous period due to settlement of the underlying instruments in the current period.

(6)Transferred out of Level 3 as a result of observable market for the underlying natural gas purchase agreements.

All existing counterparty derivative contracts provide for the unconditional right of set-off in the event of default. We have elected to report derivative assets and liabilities arising from our derivative contracts with the same counterparty and the unconditional contractual right of set-off on a net basis. The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments, in instances when our derivative instruments are in an asset position. Additionally, counterparties are at risk that we will be unable to meet our commitments in instances where our derivative instruments are in a liability position. We incorporate both our own nonperformance risk and the respective counterparty’s nonperformance risk in fair value measurements depending on the position of the derivative. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of any applicable credit enhancements, such as collateral postings, set-off rights and guarantees.

Liquefaction Supply Derivatives

We hold Liquefaction Supply Derivatives which are primarily indexed to the natural gas market and international LNG indices. As of March 31, 2024, the remaining fixed terms of the Liquefaction Supply Derivatives ranged up to approximately 14 years, some of which commence or accelerate upon the satisfaction of certain events or development of infrastructure to support natural gas gathering and transport.

The forward notional amount for the Liquefaction Supply Derivatives was approximately 5,432 TBtu and 5,478 TBtu as of March 31, 2024 and December 31, 2023, respectively, inclusive of amounts under contracts with unsatisfied contractual conditions, and exclusive of extension options that were uncertain to be taken as of March 31, 2024.

Table of Contents

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

~~All~~The ~~counterparty~~following ~~derivative~~table ~~contracts~~shows ~~provide for~~ the ~~unconditional~~effect ~~right of set-off in the event of default. We have elected to report derivative assets~~ and ~~liabilities~~location ~~arising from our derivative contracts with the same counterparty and the unconditional contractual right~~ of ~~set-off on a net basis. The use of derivative instruments exposes us to counterparty credit risk, or~~ the ~~risk~~Liquefaction ~~that~~Supply aDerivatives ~~counterparty~~recorded will be unable to meet its commitments, in instances when our derivative instruments are in an asset position. Additionally, counterparties are at risk that we will be unable to meet our commitments in instances where our derivative instruments are in a liability position. We incorporate both our own nonperformance risk and the respective counterparty’s nonperformance risk in fair value measurements depending on ~~the position of the derivative. In adjusting the fair value of~~ our ~~derivative~~Statements ~~contracts for the effect~~ of ~~nonperformance~~Operations ~~risk,~~(in ~~we have considered the impact of any applicable credit enhancements, such as collateral postings, set-off rights and guarantees.~~ millions):

Liquefaction Supply Derivatives


		Gain Recognized in Statements of Operations
Statements of Operations Location (1)	Three Months Ended March 31,
		2024	2023

Cost of sales		55	1,260

We hold Liquefaction Supply Derivatives which are primarily indexed to the natural gas market and international LNG indices. The firm terms of the Liquefaction Supply Derivatives range up to approximately 15 years, some of which commence upon the satisfaction of certain events or states of affairs.

The forward notional amount for our Liquefaction Supply Derivatives was approximately 5,642 TBtu and 5,972 TBtu as of September 30, 2023 and December 31, 2022, respectively, excluding notional amounts associated with extension options that were uncertain to be taken as of September 30, 2023.

The following table shows the effect and location of our Liquefaction Supply Derivatives recorded on our Statements of Operations (in millions):

	Gain (Loss) Recognized in Statements of Operations
Statements of Operations Location (1)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
LNG revenues	$	—	$	(3)	$	—	$	1
Cost of sales	365		(1,625)		1,867		(2,448)

(1)Does not include the realized value associated with Liquefaction Supply Derivatives that settle through physical delivery. Fair value fluctuations associated with commodity derivative activities are classified and presented consistently with the item economically hedged and the nature and intent of the derivative instrument.

Fair Value and Location of Derivative Assets and Liabilities on the Balance Sheets

The following table shows the fair value and location of our Liquefaction Supply Derivatives on our Balance Sheets (in millions):

Fair Value Measurements as of (1)

Balance Sheets Location

~~September~~March 3031, ~~2023~~2024

December 31, ~~2022~~2023

Current derivative assets

3437

2430

Derivative assets

~~111~~59

2840

Total derivative assets

~~145~~96

5270

Current derivative liabilities

(~~294~~144)

(~~769~~196)

Derivative liabilities

(1,~~731~~566)

(31,~~024~~531)

Total derivative liabilities

(21,~~025~~710)

(31,~~793~~727)

Derivative liability, net

(1,~~880~~614)

(31,~~741~~657)

(1)Does not include collateral posted bywith counterparties toby us of $1 million and zero as of ~~September~~March 3031, 2024 and December 31, 2023, respectively, which is included in other current ~~liabilities~~assets, net on our Balance Sheets, and does not include collateral posted ~~with~~by counterparties byto us of zero and $35 4 million as of March 31, 2024 and December 31, ~~2022~~2023, respectively, which is included in ~~margin~~other ~~deposits~~current liabilities on our Balance Sheets.

Balance Sheets Presentation

The following table shows the fair value of our derivatives outstanding on a gross and net basis (in millions) for our derivative instruments that are presented on a net basis on our Balance Sheets:


	Liquefaction Supply Derivatives
	March 31, 2024		December 31, 2023
Gross assets	$	130	$	88
Offsetting amounts	(34)		(18)
Net assets	$	96	$	70

Gross liabilities	$	(1,713)	$	(1,746)
Offsetting amounts	3		19
Net liabilities	$	(1,710)	$	(1,727)

Table of Contents

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Balance Sheets Presentation

The following table shows the fair value of our derivatives outstanding on a gross and net basis (in millions) for our derivative instruments that are presented on a net basis on our Balance Sheets:

	Liquefaction Supply Derivatives
	September 30, 2023		December 31, 2022
Gross assets	$	172	$	57
Offsetting amounts	(27)		(5)
Net assets	$	145	$	52
Gross liabilities	$	(2,029)	$	(3,814)
Offsetting amounts	4		21
Net liabilities	$	(2,025)	$	(3,793)

NOTE 7—ACCRUED LIABILITIES

Accrued liabilities consisted of the following (in millions):

	September 30,		December 31,
	March 31,		December 31,
	2023		2022
	2024		2023
Natural gas purchases	$	~~372~~263	$	~~1,017~~464
Interest costs and related debt fees	8378		~~165~~159
Liquefaction Project costs	7350		~~125~~58
Other accrued liabilities	56		75
Total accrued liabilities	$	~~533~~397	$	~~1,314~~686

NOTE 8—DEBT

Debt consisted of the following (in millions):

	September 30,		December 31,
	March 31,		December 31,
	2023		2022
	2024		2023
Senior Secured Notes:
5.75% due 2024 (the “2024 Senior Notes”)	$	350	$	2,000
5.750% due 2024	$	150	$	300
5.625% due 2025	2,000		2,000
5.875% due 2026	1,500		1,500
5.00% due 2027	1,500		1,500
4.200% due 2028	1,350		1,350
4.500% due 2030	2,000		2,000
4.746% weighted average rate due 2037	1,782		1,782
Total Senior Secured Notes	10,~~482~~282		1210,~~132~~432
Working capital revolving credit and letter of credit reimbursement agreement (the “Working Capital Facility”)	—		—
Revolving credit and guaranty agreement (the “Revolving Credit Facility”)	—		—
Total debt	10,~~482~~282		1210,~~132~~432
Current debt, net of discount and debt issuance costs	(349)		—
Current debt, net of unamortized debt issuance costs	(2,145)		(300)
Long-term portion of unamortized discount and debt issuance costs, net	(74)		(92)
Unamortized discount and debt issuance costs	(64)		(69)
Total long-term debt, net of discount and debt issuance costs	$	10,059	$	12,040
Total long-term debt, net of unamortized discount and debt issuance costs	$	8,073	$	10,063

Revolving Credit Facility

Below is a summary of our Revolving Credit Facility as of March 31, 2024 (in millions):

Revolving Credit Facility

Total facility size

1,000

Less:

Outstanding balance

—

Letters of credit issued

272

Available commitment

728

Priority ranking

Senior secured

Interest rate on available balance (1)

SOFR plus credit spread adjustment of 0.1%, plus margin of 1.0% - 1.75% or base rate plus 0.0% - 0.75%

Commitment fees on undrawn balance (1)

0.075% - 0.30%

Maturity date

June 23, 2028

(1)The margin on the interest rate and the commitment fees is subject to change based on our credit rating.

Table of Contents

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Revolving Credit Facility

Below is a summary of our Revolving Credit Facility as of September 30, 2023 (in millions):

Revolving Credit Facility (1)

Total facility size

1,000

Less:

Outstanding balance

—

Letters of credit issued

284

Available commitment

716

Priority ranking

Senior secured

Interest rate on available balance (2)

SOFR plus credit spread adjustment of 0.1%, plus margin of 1.0% - 1.75% or base rate plus 0.0% - 0.75%

Commitment fees on undrawn balance (2)

0.075% - 0.30%

Maturity date

June 23, 2028

(1)In June 2023, we refinanced and replaced the Working Capital Facility with the Revolving Credit Facility, resulting in an extended maturity date, revised borrowing capacity, reduced rate of interest and commitment fees applicable thereunder and certain other changes to terms and conditions.

(2)The margin on the interest rate and the commitment fees is subject to change based on our credit rating.

Restrictive Debt Covenants

The indentures governing our senior notes and other agreements underlying our debt contain customary terms and events of default and certain covenants that, among other things, may limit our ability to make certain investments or pay dividends or distributions. We are restricted from making distributions under agreements governing our indebtedness generally until, among other requirements, appropriate reserves have been established for debt service using cash or letters of credit and a historical debt service coverage ratio and projected debt service coverage ratio of at least 1.25:1.00 is satisfied.

As of ~~September~~March 3031, ~~2023~~2024, we were in compliance with all covenants related to our debt agreements.

Interest Expense

Total interest expense, net of capitalized interest, consisted of the following (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
			Three Months Ended March 31,
	2023		2022		2023		2022
					2024		2023
Total interest cost	$	~~140~~	$	~~177~~	$	~~463~~137	$	~~532~~163
Capitalized interest	~~(2)~~		~~(8)~~		(41)		(372)
Total interest expense, net of capitalized interest	$	~~138~~	$	~~169~~	$	~~459~~136	$	~~495~~161

Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our senior notes (in millions):

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

CarryingAmount

EstimatedFair Value (1)

CarryingAmount

EstimatedFair Value (1)

Senior notes

10,~~482~~282

910,~~997~~097

1210,~~132~~432

1110,~~793~~375

(1)As of both ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, $1.23 billion of the fair value of our senior notes were classified as Level 3 since these senior notes were valued by applying an unobservable illiquidity adjustment to the price derived from trades or indicative bids of instruments with similar terms, maturities and credit standing. The remainder of our senior notes are classified as Level 2, based on prices derived from trades or indicative bids of the instruments.

The estimated fair value of our Revolving Credit Facility as of March 31, 2024 approximated the principal amount outstanding 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.

NOTE 9—REVENUES

The following table represents a disaggregation of revenue earned (in millions):


	Three Months Ended March 31,
		2024		2023
Revenues from contracts with customers
LNG revenues		$	1,720	$	2,106
LNG revenues—affiliate		524		761

Total revenues from contracts with customers		$	2,244	$	2,867

Table of Contents

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

The estimated fair value of our Working Capital Facility and our Revolving Credit Facility approximates the principal amount outstanding 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.

NOTE 9—REVENUES

The following table represents a disaggregation of revenue earned (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues from contracts with customers
LNG revenues	$	1,564	$	3,133	$	5,085	$	8,576
LNG revenues—affiliate	515		1,376		1,745		3,268
LNG revenues—related party	—		—		—		4
Total revenues from contracts with customers	2,079		4,509		6,830		11,848
Net derivative gain (loss) (1)	—		(3)		—		1
Total revenues	$	2,079	$	4,506	$	6,830	$	11,849

(1)See Note 6—Derivative Instruments for additional information about our derivatives.

Contract Assets and Liabilities

The following table shows our contract assets, net of current expected credit losses, which are classified as other current assets, net and other non-current assets, net on our Balance Sheets (in millions):

	September 30,		December 31,
	March 31,		December 31,
	2023		2022
	2024		2023
Contract assets, net of current expected credit losses	$	1	$	1

The following table reflects the changes in our contract liabilities, which we classify as deferred revenue and other non-current liabilities on our Balance Sheets (in millions):

	Nine Months Ended September 30, 2023
	Three Months Ended March 31, 2024
Deferred revenue, beginning of period	$	~~132~~178
Cash received but not yet recognized in revenue	~~192~~157
Revenue recognized from prior period deferral	(~~132~~178)
Deferred revenue, end of period	$	~~192~~157

The following table reflects the changes in our contract liabilities to affiliate, which we classify as other non-current liabilities—affiliate on our Balance Sheets (in millions):

	Nine Months Ended September 30, 2023
	Three Months Ended March 31, 2024
Deferred revenue—affiliate, beginning of period	$	5
Cash received but not yet recognized in revenue	56
Revenue recognized from prior period deferral	(5)
Deferred revenue—affiliate, end of period	$	56

Table of Contents

SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Transaction Price Allocated to Future Performance Obligations

Because many of our sales contracts have long-term durations, we are contractually entitled to significant future consideration which we have not yet recognized as revenue. The following table discloses the aggregate amount of the transaction price that is allocated to performance obligations that have not yet been satisfied:

	September 30, 2023			December 31, 2022
	March 31, 2024			December 31, 2023
	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)
LNG revenues	$	48.4	8	$	50.8	8
LNG revenues (2)	$	46.7	8	$	47.6	8
LNG revenues—affiliate	1.51		2	21.04		2
Total revenues	$	4947.98		$	5249.80

(1)The weighted average recognition timing represents an estimate of the number of years during which we shall have recognized half of the unsatisfied transaction price.

(2)We ~~have~~may ~~elected~~enter into contracts to sell LNG that are conditioned upon one or both of the ~~following~~parties ~~exemptions~~achieving ~~which~~certain ~~omit~~milestones such as reaching FID on a certain ~~potential~~liquefaction ~~future~~Train, ~~sources~~obtaining financing or achieving substantial completion of ~~revenue~~a ~~from~~Train and any related facilities. These contracts are included in the ~~table~~transaction price above: when the conditions are considered probable of being met and consideration is not otherwise constrained from ultimate pricing and receipt.

~~(1)We~~The ~~omit~~following potential future sources of revenue are omitted from the table above under exemptions we have elected: (1) all performance obligations that are part of a contract that has an original expected duration of one year or less and (2) substantially all variable consideration under our SPAs as well as variable consideration that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation when that performance obligation qualifies as a series. The amount of revenue from variable fees that is not included in the transaction price will vary based on the future prices of the underlying variable index, primarily Henry Hub, throughout the contract terms, to the extent customers elect to take delivery of their LNG, and adjustments to the consumer price index. Certain of our contracts contain additional variable consideration based on the outcome of contingent

(2)The table above excludes substantially all variable consideration under our SPAs. We omit from the table above all variable consideration that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation when that performance obligation qualifies as a series. The amount of revenue from variable fees that is not included in the transaction price will vary based on the future prices of Henry Hub throughout the contract terms, to the extent customers elect to take delivery of their LNG, and adjustments to the consumer price index. Certain of our contracts contain additional variable consideration based on the outcome of contingent events and the movement of various indexes. We have not included such variable consideration in the transaction price to the extent the consideration is considered constrained due to the uncertainty of ultimate pricing and receipt. Additionally, we have excluded variable consideration related to volumes that contractually are subject to additional liquefaction capacity beyond what is currently in construction or operation. The following table summarizes the amount of variable consideration earned under contracts with customers included in the table above:13

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
LNG revenues	53	%	78	%	55	%	74	%
LNG revenues—affiliate	64	%	77	%	68	%	76	%

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SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

events and the movement of various indexes. We have not included such variable consideration in the transaction price to the extent the consideration is considered constrained due to the uncertainty of ultimate pricing and receipt. Additionally, we have excluded variable consideration related to volumes that are contractually subject to additional liquefaction capacity beyond what is currently in construction or operation.

The following table summarizes the amount of variable consideration earned under contracts with customers included in the table above:


	Three Months Ended March 31,
		2024		2023
LNG revenues		50	%	61	%
LNG revenues—affiliate		63	%	73	%

NOTE 10—RELATED PARTY TRANSACTIONS

Below is a summary of our transactions with our affiliates and other related parties, all in the ordinary course of business, as reported on our Statements of Operations (in millions):

	Three Months Ended September 30,							Nine Months Ended September 30,
			Three Months Ended March 31,
	2023			2022				2023				2022
						2024				2023
LNG revenues—affiliate
SPAs and Letter Agreements with Cheniere Marketing	$	~~513~~		$	~~1,328~~	$	524	$	~~1,742~~	$	761	$	~~3,173~~
Contracts for Sale and Purchase of Natural Gas and LNG with other affiliates	2			48				3				95
Cost of sales—affiliate
Total LNG revenues—affiliate	515			1,376				1,745				3,268
Cheniere Marketing Agreements						4				—
LNG revenues—related party
Cargo loading fees under TUA						14				14
Natural Gas Transportation and Storage Agreements (1)	—			—				—				4
Contracts for Sale and Purchase of Natural Gas and LNG						(1)				19
Cost of sales—affiliate
Total cost of sales—affiliate						17				33
Cargo loading fees under TUA	12			12				37				37
Operating and maintenance expense—affiliate
Contracts for Sale and Purchase of Natural Gas and LNG	2			99				22				164
TUA						69				68
Total cost of sales—affiliate	14			111				59				201
Natural Gas Transportation Agreement						20				21
Cost of sales—related party
Services Agreements (see Note 1)						34				35
Natural Gas Transportation and Storage Agreements (1)	—			—				—				1
Total operating and maintenance expense—affiliate						123				124
Operating and maintenance expense—affiliate
Operating and maintenance expense—related party
TUA	69			67				206				200
Natural Gas Transportation and Storage Agreements (1)						13				16
Natural Gas Transportation Agreement	20			20				61				60
General and administrative expense—affiliate
Services Agreements (see Note 1)	29			33		15		94		16		94
LNG Site Sublease Agreement	—			—				1				1
Total operating and maintenance expense—affiliate	118			120				362				355
Operating and maintenance expense—related party
Natural Gas Transportation and Storage Agreements (1)	14			18				44				45
General and administrative expense—affiliate
Services Agreements (see Note 1)	15			16				46				50

(1)This related party is partially owned by ~~Brookfield~~the ~~Asset~~investment ~~Management,~~management ~~Inc.,~~company ~~who~~that indirectly owns a portion of CQP’s limited partner interests.

~~Other~~We ~~Agreements~~had $37 million and $64 million due to affiliates as of March 31, 2024 and December 31, 2023, respectively, under the agreements with affiliates referenced in the above table.

~~Cooperation~~Disclosures ~~Agreement~~relating to future consideration under revenue contracts with affiliates is included in Note 9—Revenues.

WeSee ~~have~~our aannual ~~cooperation~~report ~~agreement~~on ~~with~~Form ~~SPLNG~~10-K ~~that~~for ~~allows~~the usfiscal toyear ~~retain~~ended ~~and~~December ~~acquire~~31, ~~certain~~2023 ~~rights~~for toadditional ~~access~~information regarding the ~~property~~agreements ~~and~~referenced ~~facilities~~in ~~that are owned by SPLNG for~~ the ~~purpose~~above ~~of constructing~~table, ~~modifying~~as ~~and~~well ~~operating~~as ~~the~~a ~~Liquefaction~~description ~~Project. In~~of ~~consideration~~other ~~for~~agreements ~~access given to us,~~ we have ~~agreed~~with toour ~~transfer to SPLNG title of certain facilities~~affiliates, ~~equipment~~including ~~and~~the ~~modifications,~~Cooperation ~~which SPLNG is obligated to operate and maintain~~Agreement. ~~The~~Under ~~term of~~ this agreement, iswe ~~consistent with our TUA described above. We~~ conveyed $4 3 million ofand zero in assets to SPLNG ~~under this agreement~~ during ~~each of~~ the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 and ~~expect to convey an additional $4 million in the fourth quarter of~~ 2023~~. We did not convey any assets to SPLNG under this agreement during the three and nine months ended September 30~~, ~~2022~~respectively.

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SABINE PASS LIQUEFACTION, LLC

NOTES TO FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 11—CUSTOMER CONCENTRATION

The concentration of our customer credit risk in excess of 10% of total revenues and/or trade and other receivables, net of current expected credit losses and contract assets, net of current expected credit losses was as follows:

	~~Percentage of Total Revenues from External Customers~~		Percentage of Total Revenues from External Customers		Percentage of Trade and Other Receivables, Net and Contract Assets, Net from External Customers
	Three Months Ended September 30,		Nine Months Ended September 30,		September 30,	December 31,
		Three Months Ended March 31,		March 31,	December 31,
	2023	2022	2023	2022		2023	2022
			2024	2023		2024	2023
Customer A	~~18%~~	~~21%~~	2425%	2528%		2024%	2822%
Customer B	~~19%~~	~~18%~~	1615%	17%		1516%	1816%
Customer C	~~18%~~	~~17%~~	1715%	1815%		2229%	*12%
Customer D	~~16%~~	~~19%~~	1513%	1715%		~~11%~~*	1815%
Customer E	*	~~12%~~	*	*		*—%	1312%
Customer F	*	*	*	*—%		1513%	*—%

* Less than 10%

NOTE 12—SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental disclosure of substantive cash flow information (in millions):

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2023		2022
	2024		2023
Cash paid during the period for interest on debt, net of amounts capitalized	$	~~524~~211	$	~~456~~202
Non-cash investing and financing activities:
Non-cash distributions to affiliates for conveyance of property, plant, and equipment	4		—
Unpaid purchases of property, plant and equipment	11		39
Non-cash contributions related to extinguishment of debt	2		—
Unpaid purchases of property, plant and equipment, net	19		143

~~Novation of IPM Agreement from Corpus Christi Liquefaction Stage III, LLC (“CCL Stage III”)~~15

In March 2022, in connection with a prior commitment from Cheniere to collateralize financing for Train 6 of the Liquefaction Project, we and CCL Stage III, formerly a wholly owned direct subsidiary of Cheniere that merged with and into CCL, entered into an agreement to assign to us an IPM agreement to purchase 140,000 MMBtu per day of natural gas at a price based on the Platts Japan Korea Marker (“JKM”), for a term of approximately 15 years beginning in early 2023. The transaction was accounted for as a transfer between entities under common control, which required us to recognize the obligations assumed at the historical basis of Cheniere. Upon the transfer, which occurred on March 15, 2022, we recognized $2.7 billion in distributions within our Statements of Member’s Equity (Deficit) based on our assumption of current derivative liabilities and derivative liabilities of $142 million and $2.6 billion, respectively, which represented a non-cash financing activity.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information Regarding Forward-Looking Statements

This quarterly report contains certain statements that are, or may be deemed to be, “forward-looking statements.” All statements, other than statements of historical or present facts or conditions, included herein or incorporated herein by reference are “forward-looking statements.” Included among “forward-looking statements” are, among other things:

•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 regarding our future sources of liquidity and cash requirements;

•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 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, 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 relating to our goals, commitments and strategies in relation to environmental matters;

•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.

All of these types of statements, other than statements of historical or present facts or conditions, are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “achieve,” “anticipate,” “believe,” “contemplate,” “continue,” “estimate,” “expect,” “intend,” “plan,” “potential,” “predict,” “project,” “pursue,” “target,” the negative of such terms or other comparable terminology. The forward-looking statements contained in this quarterly report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe that such estimates are reasonable, they are inherently uncertain and involve a number of risks and uncertainties beyond our control. In addition, assumptions may prove to be inaccurate. We caution that the forward-looking statements contained in this quarterly report are not guarantees of future performance and that such statements may not be realized or the forward-looking statements or events may not occur. Actual results may differ materially from those anticipated or implied in forward-looking statements as a result of a variety of factors described in this quarterly report and in the other reports and other information that we file with the SEC, including those discussed under “Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these risk factors. These forward-looking statements speak only as of the date made, and other than as required by law, we undertake no obligation to update or revise ~~any forward-looking statement or provide reasons why actual results may differ, whether as a result of new information, future events or otherwise.~~

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any forward-looking statement or provide reasons why actual results may differ, whether as a result of new information, future events or otherwise.

Introduction

The following discussion and analysis presents management’s view of our business, financial condition and overall performance and should be read in conjunction with our Financial Statements and the accompanying notes. This information is intended to provide investors with an understanding of our past performance, current financial condition and outlook for the future.

Our discussion and analysis includes the following subjects:

•Overview

•Overview of Significant Events

•Results of Operations

•Liquidity and Capital Resources

•Summary of Critical Accounting Estimates

•Recent Accounting Standards

Overview

We are a Delaware limited liability company formed by CQP. We provide clean, secure and affordable LNG to integrated energy companies, utilities and energy trading companies around the world. We aspire to conduct our business in a safe and responsible manner, delivering a reliable, competitive and integrated source of LNG to our customers.

LNG is natural gas (methane) in liquid form. The LNG we produce is shipped all over the world, ~~turned~~converted back into natural gas (called “regasification”) and then transported via pipeline to homes and businesses and used as an energy source that is essential for heating, cooking, other industrial uses and back up for intermittent energy sources. Natural gas is a cleaner-burning, abundant and affordable source of energy. When LNG is converted back to natural gas, it can be used instead of coal, which reduces the amount of pollution traditionally produced from burning fossil fuels, like sulfur dioxide and particulate matter that enters the air we breathe. Additionally, compared to coal, it produces significantly fewer carbon emissions. By liquefying natural gas, we are able to reduce its volume by 600 times so that we can load it onto special LNG carriers designed to keep the LNG cold and in liquid form for efficient transport overseas.

We own six operational Trains, for a total production capacity of approximately 30 mtpa of LNG (the “Liquefaction Project”), at a natural gas liquefaction and export facility located in Cameron Parish, Louisiana at Sabine Pass (the “Sabine Pass LNG Terminal”), one of the largest LNG production facilities in the world,. The ~~which~~Sabine ~~has~~Pass ~~six~~LNG Terminal also has operational ~~Trains,~~regasification ~~for~~facilities athat ~~total~~include ~~production~~five ~~capacity~~LNG ofstorage ~~approximately~~tanks 30and ~~mtpa~~three ofmarine ~~LNG~~berths ~~(the~~owned ~~“Liquefaction~~and ~~Project”). The~~operated ~~Sabine~~by ~~Pass~~SPLNG, ~~LNG~~a ~~Terminal~~subsidiary ~~also~~of ~~has~~CQP, ~~operational~~and ~~regasification~~a ~~facilities~~94-mile natural gas supply pipeline owned and operated by ~~SPLNG.~~CTPL, a subsidiary of CQP.

Our long-term customer arrangements form the foundation of our business and provide us with significant, stable, long-term cash flows. We have contracted most of our anticipated production capacity under SPAs, in which our customers are generally required to pay a fixed fee with respect to the contracted volumes irrespective of their election to cancel or suspend deliveries of LNG cargoes, and under an IPM agreement, in which ~~the~~a gas producer sells natural gas to us on a global LNG or natural gas index price, less a fixed liquefaction fee, shipping and other costs. The SPAs also have a variable fee component, which is generally structured to cover the cost of natural gas purchases, transportation and liquefaction fuel consumed to produce LNG. Since we procure most of our feedstock for LNG production from the U.S., the structure of these contracts helps limit our exposure to fluctuations in U.S. natural gas prices. Through our SPAs and IPM agreement, we have contracted approximately 85% of the total anticipated production ~~capacity~~ from the Liquefaction Project with approximately 14 years of weighted average remaining life as of ~~September~~March 3031, ~~2023~~2024, excluding volumes that are contractually subject to additional liquefaction capacity beyond what is currently in construction or operation.

We remain focused on safety, operational excellence and customer satisfaction. Increasing demand for LNG has allowed us to expand our liquefaction infrastructure in a financially disciplined manner. We have increased available liquefaction capacity at our Liquefaction Project as a result of debottlenecking and other optimization projects. We hold a significant land position at the Sabine Pass LNG Terminal, which provides opportunity for further liquefaction capacity expansion. In May 2023, we and another subsidiary of CQP entered the pre-filing review process with the FERC under the National Environmental Policy Act (“NEPA”) for an expansion adjacent to the Liquefaction Project with a potential production capacity of up to 20 mtpa of LNG (the “Expansion Project”). This expansion may be developed and constructed by an affiliate of ours outside of the Liquefaction Project. The development of this site or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before we make a positive final investment decision.

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~~Additionally,~~capacity weat ~~are~~our ~~committed~~Liquefaction toProject ~~the~~as ~~management~~a result of ~~our~~debottlenecking ~~most~~and ~~important~~other ~~ESG~~optimization ~~impacts,~~projects. We ~~risks~~believe ~~and~~these ~~opportunities. In~~factors ~~August~~provide ~~2023,~~a ~~Cheniere~~foundation ~~published~~for ~~The~~additional ~~Power~~growth in our portfolio of ~~Connection,~~customer ~~its~~contracts ~~fourth~~in ~~Corporate~~the ~~Responsibility~~future. We ~~(“CR”)~~hold ~~report,~~a ~~which~~significant ~~details~~land ~~its~~position ~~approach~~at ~~and~~the ~~progress~~Sabine onPass ~~ESG~~LNG ~~issues~~Terminal, ~~including~~which ~~its~~provides ~~collaboration~~opportunity ~~with~~for ~~natural~~further ~~gas~~liquefaction ~~midstream~~capacity ~~companies,~~expansion. A ~~technology~~subsidiary ~~providers~~of ~~and~~CQP ~~leading~~is ~~academic~~developing ~~institutions~~an onexpansion ~~life-cycle~~adjacent ~~assessment~~to ~~(“LCA”)~~the ~~models,~~Liquefaction ~~quantification,~~Project ~~monitoring,~~with ~~reporting~~a ~~and~~total ~~verification~~production ~~(“QMRV”)~~capacity of ~~greenhouse~~up ~~gas~~to ~~emissions~~approximately ~~and~~20 ~~other~~mtpa ~~research~~of ~~and~~LNG, ~~development~~inclusive ~~projects. Cheniere~~of ~~also~~estimated ~~co-founded~~debottlenecking ~~and~~opportunities (the ~~sponsored~~“Expansion ~~the~~Project”). In ~~Energy~~February ~~Emissions~~2024, ~~Modeling~~we and ~~Data~~other ~~Lab~~subsidiaries ~~(“EEMDL”),~~of aCQP ~~multidisciplinary~~submitted ~~research~~an ~~and~~application ~~education~~to ~~initiative~~the ~~led~~FERC byunder the ~~University~~Natural ofGas ~~Texas~~Act at(the ~~Austin~~“NGA”) infor ~~collaboration~~authorization ~~with~~to ~~Colorado~~site, ~~State~~construct ~~University~~ and operate the ~~Colorado~~Expansion ~~School~~Project, ofas ~~Mines. In~~well ~~addition,~~as ~~Cheniere~~an ~~commenced~~application ~~providing~~to ~~Cargo~~the ~~Emissions~~DOE ~~Tags~~requesting ~~(“CE~~authorization ~~Tags”)~~to export LNG to ~~our~~FTA ~~long~~countries and non-~~term~~FTA ~~customers~~countries, inboth ~~June~~of ~~2022,~~which ~~and~~applications inexclude ~~October~~debottlenecking. This ~~2022~~expansion ~~joined~~may ~~the~~be ~~Oil~~developed and ~~Gas~~constructed ~~Methane~~by ~~Partnership~~an ~~(“OGMP”)~~affiliate ~~2.0,~~of ~~the~~ours ~~United~~outside ~~Nations~~of ~~Environment~~the ~~Programme’s~~Liquefaction ~~(“UNEP”)~~Project. The ~~flagship~~development ~~oil~~of ~~and~~the ~~gas~~Expansion ~~methane~~Project ~~emissions~~or ~~reporting~~other ~~and~~projects, ~~mitigation~~including ~~initiative. Cheniere’s~~infrastructure CRprojects ~~report~~in issupport ~~available~~of atnatural ~~cheniere.com/our-responsibility/reporting-center. Information~~gas onsupply ~~Cheniere’s~~and ~~website~~LNG demand, ~~including~~will ~~the~~require, CRamong ~~report~~other things, isacceptable ~~not~~commercial ~~incorporated~~and byfinancing ~~reference~~arrangements ~~into~~before ~~this~~a ~~Quarterly~~positive ~~Report~~FID onis ~~Form 10-Q~~made.

Additionally, we are committed to the management of our most important ESG impacts, risks and opportunities. In August 2023, Cheniere published The Power of Connection, its fourth Corporate Responsibility (“CR”) report, which details its approach and progress on ESG matters. Cheniere’s CR report is available at cheniere.com/our-responsibility/reporting-center. Information on Cheniere’s website, including the CR report, is not incorporated by reference into this Quarterly Report on Form 10-Q.

Overview of Significant Events

Our significant events since January 1, ~~2023~~2024 and through the filing date of this Form 10-Q include the following:

Strategic

•In ~~May~~February ~~2023~~2024, we and ~~another~~other ~~subsidiary~~subsidiaries of CQP ~~entered~~submitted ~~the~~an ~~pre-filing~~application ~~review~~to ~~process with~~ the FERC under the ~~NEPA~~NGA for ~~the~~authorization ~~Expansion~~to ~~Project~~site, construct and inoperate ~~April 2023,~~ the ~~other~~Expansion ~~CQP~~Project, ~~subsidiary~~as ~~executed~~well aas ~~contract~~an ~~with~~application ~~Bechtel Energy Inc.~~ to ~~provide~~ the ~~front~~DOE ~~end~~requesting ~~engineering~~authorization ~~and~~to ~~design~~export ~~work~~LNG onto ~~the~~FTA ~~project. This~~countries ~~expansion may be developed~~ and ~~constructed~~non-FTA bycountries, anboth ~~affiliate~~ of ~~ours~~which ~~outside~~applications ofexclude ~~the Liquefaction Project~~debottlenecking.

Operational

•As of ~~October~~April 2625, ~~2023~~2024, ~~approximately~~over 2,~~270~~490 cumulative LNG cargoes totaling ~~approximately~~over ~~155~~170 million tonnes of LNG have been produced, loaded and exported from the Liquefaction Project.

Financial

•WeIn ~~completed~~March 2024, we prepaid $150 million of outstanding aggregate principal amount of our 5.750% Senior Secured Notes due 2024 (the ~~following~~“2024 ~~debt~~Senior ~~transactions:~~Notes”).

~~◦In September 2023, we redeemed $50 million of our 5.75% Senior Secured Notes due 2024 (the “2024 Senior Notes”).~~18

◦In July 2023, we redeemed $1.4 billion of aggregate principal amount outstanding of our 2024 Senior Notes using contributions received from CQP and cash on hand.

◦In June 2023, we entered into a $1.0 billion Senior Secured Revolving Credit and Guaranty Agreement (the “Revolving Credit Facility”). The Revolving Credit Facility refinanced and replaced our existing credit facility to, among other things, (1) extend the maturity date thereunder, (2) reduce the rate of interest and commitment fees applicable thereunder and (3) make certain other changes to the terms and conditions of the prior credit facility.

•In August 2023, Fitch Ratings upgraded our senior secured debt and issuer credit ratings from BBB to BBB+ with a stable outlook.

•In February 2023, S&P Global Ratings upgraded our issuer credit rating from BBB to BBB+ with a stable outlook.

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Results of Operations

	Three Months Ended September 30,						Nine Months Ended September 30,
			Three Months Ended March 31,
(in millions)	~~2023~~		~~2022~~		~~Variance~~		~~2023~~2024		~~2022~~2023		Variance
Revenues
LNG revenues	$	~~1,564~~	$	~~3,130~~	$	~~(1,566)~~	$	51,~~085~~720	$	82,~~577~~106	$	(~~3,492~~386)
LNG revenues—affiliate	~~515~~		~~1,376~~		~~(861)~~		~~1,745~~524		~~3,268~~761		(~~1,523~~237)
LNG revenues—related party	—		—		—		—		4		(4)
Total revenues							2,244		2,867		(623)
Total revenues	2,079		4,506		(2,427)		6,830		11,849		(5,019)
Operating costs and expenses
Operating costs and expenses (recoveries)
Cost of sales (excluding items shown separately below)							964		313		651
Cost of sales (excluding items shown separately below)	681		4,739		(4,058)		1,597		10,444		(8,847)
Cost of sales—affiliate							17		33		(16)
Cost of sales—affiliate	14		111		(97)		59		201		(142)
Operating and maintenance expense							173		176		(3)
Cost of sales—related party	—		—		—		—		1		(1)
Operating and maintenance expense—affiliate							123		124		(1)
Operating and maintenance expense	181		164		17		590		474		116
Operating and maintenance expense—related party							13		16		(3)
Operating and maintenance expense—affiliate	118		120		(2)		362		355		7
General and administrative expense							1		1		—
Operating and maintenance expense—related party	14		18		(4)		44		45		(1)
General and administrative expense—affiliate							15		16		(1)
General and administrative expense (recovery)	1		1		—		3		(1)		4
Depreciation and amortization expense							139		138		1
General and administrative expense—affiliate	15		16		(1)		46		50		(4)
Other							1		—		1
Depreciation and amortization expense	138		137		1		415		401		14
Total operating costs and expenses							1,446		817		629
Other	2		—		2		4		—		4
Income from operations							798		2,050		(1,252)
Total operating costs and expenses	1,164		5,306		(4,142)		3,120		11,970		(8,850)
Income (loss) from operations	915		(800)		1,715		3,710		(121)		3,831
Other income (expense)
Interest expense, net of capitalized interest	~~(138)~~		~~(169)~~		31		(~~459~~136)		(~~495~~161)		3625
Loss on modification or extinguishment of debt	(4)		—		(4)		(6)		—		(6)
Other income, net							3		4		(1)
Other income, net	3		3		—		11		3		8
Total other expense							(133)		(157)		24
Total other expense	(139)		(166)		27		(454)		(492)		38
Net income							$	665	$	1,893	$	(1,228)
Net income (loss)	$	776	$	(966)	$	1,742	$	3,256	$	(613)	$	3,869

~~Operational~~Volumes ~~volumes~~ loaded and recognized from the Liquefaction Project

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2023

2022

Variance

2023

2022

Variance

2024

2023

Variance

LNG volumes loaded and recognized as revenues (in TBtu)

~~362~~

~~363~~

~~(1)~~

~~1,118~~417

~~1,110~~403

814

Net income ~~(loss)~~

~~The~~Substantially ~~increases~~all of the unfavorable variance of $1.72 billion ~~and~~in ~~$3.9~~net ~~billion~~income for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ as compared to the same ~~periods~~period of ~~2022,~~2023 ~~were~~was ~~primarily~~ attributable to ~~the~~unfavorable ~~favorable variances of $2.0 billion and $4.3 billion, respectively, from~~ changes in fair value and settlements of derivatives~~. During~~ between the ~~three~~periods. The ~~and~~derivative ~~nine~~variance ~~months~~was ~~ended~~substantially ~~September~~all ~~30, 2023, we recognized gains of $217 million and $1.5 billion, respectively,~~ due to ~~non-cash~~significant ~~favorable~~decrease ~~changes~~ in ~~fair~~gains ~~value~~attributable ofto ~~the~~our IPM agreement with Tourmaline Oil Marketing Corp., ~~(the~~which ~~“Tourmaline~~changed ~~IPM~~from ~~Agreement”) as~~ a ~~result~~gain of ~~lower~~$1.0 billion ~~volatility~~ in ~~international gas prices compared to~~ the ~~same~~three ~~periods~~months ofended ~~2022~~March ~~and declines in international forward commodity curves~~31, as2023 ~~compared~~ to ~~losses~~a gain of $~~1.3~~6 ~~billion~~million ~~and $2.2 billion~~ in the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~2024, ~~respectively,~~due ~~following~~to ~~the~~moderation ~~assignment~~ of ~~the~~changes ~~Tourmaline~~in ~~IPM~~volatility ~~Agreement~~in tointernational usgas ~~from~~prices ~~Corpus~~during ~~Christi~~the ~~Liquefaction~~current ~~Stage~~period ~~III,~~relative ~~LLC~~to ~~(“CCL~~the ~~Stage~~same ~~III”)~~period inof ~~March 2022~~2023. ~~The~~Excluding ~~2022 losses following~~ the ~~assignment~~aforementioned ~~were~~changes ~~primarily~~in ~~attributed~~fair tovalue ~~our~~and ~~lower~~settlements ~~credit risk profile relative to that~~ of ~~CCL~~derivatives, ~~Stage~~LNG ~~III~~revenues, ~~resulting~~net inof acost ~~higher derivative liability given reduced risk~~ of ~~our~~sales ~~own~~was ~~nonperformance~~relatively ~~and~~consistent ~~shifts~~between in the ~~international~~comparable ~~forward commodity curve~~periods. ~~The increases were partially offset by a reduction in LNG revenues, net of~~

20The following is an additional discussion of the significant drivers of the variance in net income by line item:

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cost of sales and excluding the effect of derivatives (as further described above), of $265 million and $343 million for the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022, the majority of which was attributable to lower margins on LNG delivered.

The following is additional discussion of the significant drivers of the variance in net income (loss) by line item:

Revenues

~~The~~We ~~$2.4 billion~~had ~~and~~a $~~5.0~~623 ~~billion~~million ~~decreases~~decrease in revenues between the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ as compared to the same ~~periods~~period of ~~2022~~2023, ~~were~~which was primarily attributable to a $731 million decrease from lower pricing per MMBtu as a result of decreased Henry Hub pricing, partially offset by a $104 million increase from higher production volume largely due to reduced operating and maintenance activities compared to the same period of 2023 and colder weather.

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Operating costs and expenses

The $4.629 million increase between the three months ended March 31, 2024 and 2023 was attributable to a $1.2 billion unfavorable variance from changes in fair value and settlements of derivatives included in cost of sales, from a $81.93 billion ~~decreases~~gain ~~between~~in the three ~~and~~months ~~nine~~ended March 31, 2023 to a $55 million gain in the three months ended ~~September~~March 3031, ~~2023~~2024, ~~respectively~~primarily due to moderating volatility in international gas prices during the current period resulting in decreased non-cash gain in fair value of our commodity derivatives indexed to such prices during the three months ended March 31, 2024, specifically associated with the Tourmaline IPM Agreement as ~~compared~~discussed toabove under Net income. This increase was partially offset by a $570 million decrease in cost of sales excluding the ~~same~~effect ~~periods~~of derivative changes described above, primarily as a result of ~~2022~~a ~~were~~$515 million ~~attributable~~decrease in cost of natural gas feedstock largely due to: lower U.S. natural gas prices.

•$2.0 billion and $4.3 billion favorable variances between the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022, from changes in fair value and settlements of derivatives included in cost of sales, from losses of $1.6 billion and $2.4 billion in the three and nine months ended September 30, 2022, respectively, to gains of $365 million and $1.9 billion in the three and nine months ended September 30, 2023, respectively, primarily due to decreased international gas prices resulting in non-cash favorable changes in fair value of our commodity derivatives indexed to such prices, specifically associated with the Tourmaline IPM Agreement as discussed above under Net income (loss); and

•$2.2 billion and $4.7 billion decreases between the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022, in cost of sales excluding the effect of derivative changes described above, primarily as a result of $2.2 billion and $4.6 billion decreases, respectively, in cost of natural gas feedstock largely due to lower U.S. natural gas prices.

The favorable variances were partially offset by increases in third party operating and maintenance expense of $17 million and $116 million for the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022. For the nine months ended September 30, 2023, increases in third party operating and maintenance expense were primarily due to the completion of planned large-scale maintenance activities on two trains at the Liquefaction Project during June 2023. Further contributing to the increase in third party operating and maintenance expense during the three and nine months ended September 30, 2023 was other third party service and maintenance contract costs and natural gas transportation and storage capacity demand charges.

Significant factors affecting our results of operations

Below are significant factors that affect our results of operations.

Gains and losses on derivative instruments

Derivative instruments are utilized to manage our exposure to commodity-related marketing and price risks and are reported at fair value on our Financial Statements. For commodity derivative instruments related to our IPM agreement, the underlying LNG sales being economically hedged are accounted for under the accrual method of accounting, whereby revenues expected to be derived from the future LNG sales are recognized only upon delivery or realization of the underlying transaction. ~~Because~~Notwithstanding the operational intent to mitigate risk exposure over time, the recognition of derivative instruments at fair value has the effect of recognizing gains or losses relating to future period exposure, and given the significant volumes, long-term duration and volatility in price basis for certain of our derivative contracts, the use of derivative instruments may result in continued volatility of our results of operations based on changes in market pricing, counterparty credit risk and other relevant factors that may be outside of our control. For example, ~~notwithstanding~~as described in Note 6—Derivative Instruments of our Notes to Financial Statements, the ~~operational~~fair ~~intent~~value of the Liquefaction Supply Derivatives incorporates market participant-based assumptions pertaining to ~~mitigate~~certain ~~risk~~contractual ~~exposure~~uncertainties, ~~over~~including ~~time~~those related to the availability of market information for delivery points, which may require future development of infrastructure, as well as the timing of satisfaction of certain events or development of infrastructure to support natural gas gathering and transport. We may recognize changes in fair value through earnings that could significantly impact our results of operations if and when such uncertainties are resolved.

Commissioning cargoes

Prior to substantial completion of a Train, amounts received from the sale of commissioning cargoes from that Train are offset against LNG terminal construction-in-process, because these amounts are earned or loaded during the testing phase for

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the construction of that Train. During the nine months ended September 30, 2022, we realized offsets to LNG terminal costs of $148 million corresponding to 13 TBtu attributable to the sale of commissioning cargoes from Train 6 of the Liquefaction Project. We did not have any commissioning cargoes during the three months ended September 30, 2022 or the three and nine months ended September 30, 2023.

Liquidity and Capital Resources

The following information describes our ability to generate and obtain adequate amounts of cash to meet our requirements in the short term and the long term. In the short term, we expect to meet our cash requirements using operating cash flows and available liquidity, consisting of restricted cash and cash equivalents and available commitments under our credit facility. Additionally, we expect to meet our long term cash requirements by using operating cash flows and other future potential sources of liquidity, which may include debt offerings. The table below provides a summary of our available liquidity (in millions). Future material sources of liquidity are discussed below.

	September 30, 2023
	March 31, 2024
Restricted cash and cash equivalents designated for the Liquefaction Project	$	3559
Revolving Credit Facility (1)	~~716~~728
Total available liquidity	$	~~751~~787

(1)Available commitments represent total commitments less loans outstanding and letters of credit issued under the Revolving Credit Facility as of ~~September~~March 3031, ~~2023~~2024. See Note 8—Debt of our Notes to Financial Statements for additional information on the Revolving Credit Facility and other debt instruments.

Our liquidity position subsequent to ~~September~~March 3031, ~~2023~~2024 will be driven by future sources of liquidity and future cash requirements. Future sources of liquidity are expected to be composed of (1) cash receipts from executed contracts, under which we are contractually entitled to future consideration, and (2) additional sources of liquidity, from which we expect to receive cash although the cash is not underpinned by executed contracts. Future cash requirements are expected to be composed of (1) cash payments under executed contracts, under which we are contractually obligated to make payments, and (2) additional cash requirements, under which we expect to make payments although we are not contractually obligated to make the payments under executed contracts. For ~~further~~a discussion of our future sources and uses of liquidity, see the liquidity and capital resources disclosures in our annual report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023.

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Sources and Uses of Cash

The following table summarizes the sources and uses of our restricted cash and cash equivalents (in millions). The table presents capital expenditures on a cash basis; therefore, these amounts differ from the amounts of capital expenditures, including accruals, which are referred to elsewhere in this report. Additional discussion of these items follows the table.

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2023		2022
	2024		2023
Net cash provided by operating activities	$	~~1,971~~638	$	~~2,142~~777
Net cash used in investing activities	(~~129~~15)		(~~345~~87)
Net cash used in financing activities	(~~1,899~~620)		(~~1,700~~622)
Net increase (decrease) in restricted cash and cash equivalents	$	(57)	$	97
Net increase in restricted cash and cash equivalents	$	3	$	68

Operating Cash Flows

The $~~171~~139 million decrease between the periods was primarily related to lower cash receipts from the sale of LNG cargoes from lower pricing per MMBtu primarily as a result of decreased Henry Hub pricing, which was partially offset by lower cash outflows for natural gas feedstock, mostly due to lower U.S. natural gas prices.

Investing Cash Flows

Cash outflows for property, plant and equipment during both the ~~nine~~three months ended ~~September~~March 3031, 2024 and 2023 were primarily related to optimization and other site improvement projects. ~~Cash outflows for property, plant and equipment during the nine months ended September 30, 2022 were primarily related to the construction costs for Train 6 of the Liquefaction Project,~~

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which achieved substantial completion on February 4, 2022, and the construction of the third marine berth at the Liquefaction Project, which achieved substantial completion on October 27, 2022 and which we immediately conveyed to SPLNG.

Financing Cash Flows

During the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, we made distributions to CQP of $~~1.4~~470 ~~billion~~million and $~~1.7~~622 ~~billion~~million, respectively. ~~During the nine months ended September 30, 2023, we received $1.2 billion of contributions from CQP, which were used with cash on hand to redeem $1.4 billion of the 2024 Senior Notes.~~ Additionally, during the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, we ~~purchased~~prepaid ~~$200 million of~~ the ~~2024~~outstanding ~~SPL~~aggregate ~~Senior~~principal ~~Notes~~amount inof ~~the open market and redeemed an additional~~ $50150 million of the 2024 Senior Notes, ~~which~~with ~~leaves~~cash ~~only~~on ~~$350 million to be repaid for debt maturing in 2024~~hand. We did not have any debt activity during the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023.

Summary of Critical Accounting Estimates

The preparation of Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Financial Statements and the accompanying notes. There have been no significant changes to our critical accounting estimates from those disclosed in our annual report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023.

Recent Accounting Standards

For a summary of recently issued accounting standards, see Note 1—Nature of Operations and Basis of Presentation of our Notes to Financial Statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Marketing and Trading Commodity Price Risk

We have commodity derivatives consisting of natural gas supply contracts for the operation of the Liquefaction Project (the “Liquefaction Supply Derivatives”). In order to test the sensitivity of the fair value of the Liquefaction Supply Derivatives to changes in underlying commodity prices, management modeled a 10% change in the commodity price for natural gas for each delivery location as follows (in millions):

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Fair Value

Change in Fair Value

Fair Value

Change in Fair Value

Liquefaction Supply Derivatives

(1,~~880~~614)

~~392~~351

(31,~~741~~657)

~~565~~362

See Note 6 —Derivative Instruments of our Notes to Financial Statements for additional details about our derivative instruments.

ITEM 4. CONTROLS AND PROCEDURES

We maintain a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports filed by us under Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As of the end of the period covered by this report, we evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective.

During the most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We may in the future be involved as a party to various legal proceedings, which are incidental to the ordinary course of business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual disposition of these matters. There have been no material changes to the legal proceedings disclosed in our annual report on Form 10-K for the fiscal year ended December 31, ~~2022, except for the update presented in our quarterly report on Form 10-Q for the quarterly period ended March 31,~~ 2023.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in our annual report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023.

ITEM 6. EXHIBITS

Exhibit No.

Description

10.1*

Change ~~orders~~order to the Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Sabine Pass LNG Stage 4 Liquefaction Facility, dated November 87, 2018, by and between the Company and Bechtel Oil Gas and Chemicals, Inc.: (i) the Change Order CO-~~00076~~00081 ~~Supplemental~~Subproject ~~FERC Condition 80 Requirements, dated May 5, 2023,~~ 6(iia) ~~the~~Letter ~~Change~~of ~~Order~~Credit ~~CO-00077 Louisiana Sales and Use Tax Provisional Sum Closure~~Reduction, dated ~~June~~August 1630, 2023, (iii) the Change Order CO-00078 Natural Gas Pipeline (NGPL) Security Coordination Provisional Sum Closure, dated June 22, 2023, (iv) the Change Order CO-00079 Insurance Provisional Sum Closure, dated July 27, 2023 and (v) the Change Order Co-00080 Borrowed Items, dated September 6, 2023

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 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

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



*			Filed herewith.
**			Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SABINE PASS LIQUEFACTION, LLC
Date:	~~November~~May 12, ~~2023~~2024	By:	/s/ Zach Davis
			Zach Davis
			Chief Financial Officer
			(on behalf of the registrant andas principal financial officer)
Date:	~~November~~May 12, ~~2023~~2024	By:	/s/ David Slack
			David Slack
			Chief Accounting Officer
			(on behalf of the registrant andas principal accounting officer)

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