UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~September~~June 30, ~~2018~~2019

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

For the transition period fromto

Commission file number 333-215435

Cheniere Corpus Christi Holdings, LLC

(Exact name of registrant as specified in its charter)



Delaware			~~333-215435~~	47-1929160
(State or other jurisdiction of incorporation or organization)			(~~Commission File Number)~~	(I.R.S. Employer Identification No.)

700 Milam Street	,	Suite 1900 ~~Houston, Texas~~
Houston	,	Texas	77002
(Address of principal executive offices)				(Zip code)

~~(713)~~ (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. Yesx☐ No ¨☒

Note: ~~As of January 1, 2018, the~~The registrant is a voluntary filer not subject to the filing requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934. However, 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 ~~and post~~ such files). Yesx ☒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~~ x	~~Smaller reporting company~~ ¨
	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 x☒

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC

TABLE OF CONTENTS

DEFINITIONS

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

Common Industry and Other Terms



Bcf		billion cubic feet
Bcf/d		billion cubic feet per day
Bcf/yr		billion cubic feet per year
Bcfe		billion cubic feet equivalent
DOE		U.S. Department of Energy
EPC		engineering, procurement and construction
FERC		Federal Energy Regulatory Commission
FTA countries		countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
GAAP		generally accepted accounting principles in the United States
Henry Hub		the final settlement price (in USD per MMBtu) for the New York Mercantile Exchange’s Henry Hub natural gas futures contract for the month in which a relevant cargo’s delivery window is scheduled to begin
LIBOR		London Interbank Offered Rate
LNG		liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
MMBtu		million British thermal units, an energy unit
mtpa		million tonnes per annum
non-FTA countries		countries with which the United States does not have a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted
SEC		U.S. Securities and Exchange Commission
SPA		LNG sale and purchase agreement
TBtu		trillion British thermal units, an energy unit
Train		an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of ~~September~~June 30, ~~2018,~~2019, including our ownership of certain subsidiaries, and the references to these entities used in this quarterly report:

Unless the context requires otherwise, references to “CCH,” “the Company,” “we,” “us,” and “our” refer to Cheniere Corpus Christi Holdings, LLC and its consolidated subsidiaries.


PART I.	FINANCIAL INFORMATION


ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)


	September 30,		December 31,		June 30,		December 31,
	2018		2017		2019		2018
ASSETS	(unaudited)				(unaudited)
Current assets
Cash and cash equivalents	$	—	$	—	$	—	$	—
Restricted cash	219,950		226,559		279,170		289,141
Accounts and other receivables					38,576		24,989
Accounts receivable—affiliate					30,613		21,060
Advances to affiliate	53,845		31,486		69,140		94,397
Inventory	8,638		—		63,274		26,198
Derivative assets	16,008		—		5,498		15,627
Derivative assets—related party					1,807		2,132
Other current assets	4,392		1,494		20,606		15,217
Other current assets—affiliate	498		190		31		633
Total current assets	303,331		259,729		508,715		489,394

Property, plant and equipment, net	10,556,309		8,261,383		12,077,658		11,138,825
Debt issuance and deferred financing costs, net	53,465		98,175		17,788		38,012
Non-current derivative assets	91,091		2,469		7,678		19,032
Non-current derivative assets—related party					614		3,381
Other non-current assets, net	29,841		38,124		51,546		31,709
Total assets	$	11,034,037	$	8,659,880	$	12,663,999	$	11,720,353

LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable	$	25,304	$	6,461	$	29,196	$	16,202
Accrued liabilities	256,527		258,060		385,208		162,205
Accrued liabilities—related party					4,174		—
Current debt					—		168,000
Due to affiliates	19,846		23,789		19,451		25,086
Derivative liabilities	213		19,609		25,348		13,576
Other current liabilities					1,106		—
Other current liabilities—affiliate					506		—
Total current liabilities	301,890		307,919		464,989		385,069

Long-term debt, net	8,589,201		6,669,476		10,221,597		9,245,552
Non-current derivative liabilities	3,441		15,209		77,218		8,595
Other non-current liabilities					6,775		—
Other non-current liabilities—affiliate					846		—

Member’s equity	2,139,505		1,667,276		1,892,574		2,081,137
Total liabilities and member’s equity	$	11,034,037	$	8,659,880	$	12,663,999	$	11,720,353

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Revenues	$	—		$	—		$	—		$	—
LNG revenues													$	118,525		$	—		$	131,581		$	—
LNG revenues—affiliate													181,548			—			274,573			—
Total revenues													300,073			—			406,154			—

Expenses
Operating and maintenance expense (recovery)	(9,477		)	533			(6,377		)	2,097
Operating costs and expenses
Cost of sales (excluding depreciation and amortization expense shown separately below)													181,136			1,031			238,665			1,147
Cost of sales—related party													24,230			—			35,753			—
Operating and maintenance expense													60,817			1,103			92,672			1,953
Operating and maintenance expense—affiliate	1,522			1,504			2,539			1,653			15,459			551			20,706			1,017
Development expense	49			82			172			497			532			89			532			123
Development expense—affiliate	—			—			—			8			38			—			38			—
General and administrative expense	1,479			861			3,514			3,824			1,542			1,185			3,079			2,035
General and administrative expense—affiliate	607			289			1,605			753			2,407			595			3,562			998
Depreciation and amortization expense	3,488			248			5,246			537			57,300			1,387			79,624			1,758
Impairment expense and loss (gain) on disposal of assets	(13		)	2,059			(13		)	2,064
Total expenses (recoveries)	(2,345		)	5,576			6,686			11,433
Impairment expense and loss on disposal of assets													—			—			313			—
Total operating costs and expenses													343,461			5,941			474,944			9,031

Income (loss) from operations	2,345			(5,576		)	(6,686		)	(11,433		)
Loss from operations													(43,388		)	(5,941		)	(68,790		)	(9,031		)

Other income (expense)
Interest expense, net of capitalized interest													(73,052		)	—			(84,810		)	—
Loss on modification or extinguishment of debt	—			—			(15,332		)	(32,480		)	—			(15,332		)	—			(15,332		)
Derivative gain (loss), net	21,818			(2,906		)	119,233			(35,002		)	(73,821		)	28,566			(108,908		)	97,415
Other income (expense)	225			(95		)	184			(177		)	1,354			26			2,324			(41		)
Total other income (expense)	22,043			(3,001		)	104,085			(67,659		)	(145,519		)	13,260			(191,394		)	82,042

Net income (loss)	$	24,388		$	(8,577	)	$	97,399		$	(79,092	)	$	(188,907	)	$	7,319		$	(260,184	)	$	73,011

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF MEMBER’S EQUITY

(in thousands)

(unaudited)

Cheniere CCH HoldCo I, LLC
Total Member’s
Equity
Balance at December 31, 2017 $ 1,667,276
$ 1,667,276
Capital contributions 374,830
374,830
Net income 97,399
97,399
Balance at September 30, 2018 $ 2,139,505
$ 2,139,505



Three and Six Months Ended June 30, 2019
	Cheniere CCH HoldCo I, LLC			Total Member’s Equity
Balance at December 31, 2018	$	2,081,137		$	2,081,137
Capital contributions	10			10
Net loss	(71,277		)	(71,277		)
Balance at March 31, 2019	2,009,870			2,009,870
Capital contributions	71,611			71,611
Net loss	(188,907		)	(188,907		)
Balance at June 30, 2019	$	1,892,574		$	1,892,574



Three and Six Months Ended June 30, 2018
	Cheniere CCH HoldCo I, LLC		Total Member’s Equity
Balance at December 31, 2017	$	1,667,276	$	1,667,276
Capital contributions	189,000		189,000
Net income	65,692		65,692
Balance at March 31, 2018	1,921,968		1,921,968
Capital contributions	185,797		185,797
Net income	7,319		7,319
Balance at June 30, 2018	$	2,115,084	$	2,115,084

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended September 30,						Six Months Ended June 30,
	2018			2017			2019			2018
Cash flows from operating activities
Net income (loss)	$	97,399		$	(79,092	)	$	(260,184	)	$	73,011
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expense	5,246			537			79,624			1,758
Amortization of debt issuance costs							4,959			—
Loss on modification or extinguishment of debt	15,332			32,480			—			15,332
Total losses (gains) on derivatives, net	(128,590		)	34,707			101,456			(96,265		)
Net cash used for settlement of derivative instruments	(7,204		)	(42,160		)
Impairment expense and loss (gain) on disposal of assets	(13		)	2,064
Net cash provided by (used for) settlement of derivative instruments							3,514			(5,145		)
Impairment expense and loss on disposal of assets							313			—
Other							839			—
Changes in operating assets and liabilities:
Accounts receivable							(38,519		)	(58		)
Accounts receivable—affiliate							(22,339		)	—
Inventory	(8,638		)	—			(30,843		)	(6,935		)
Accounts payable and accrued liabilities	1,710			495			133,641			6,785
Accrued liabilities—related party							4,174			—
Due to affiliates	152			1,176			5,598			(376		)
Advances to affiliate	(1,704		)	—			(30,907		)	—
Other, net	(5,244		)	(1,032		)	(3,931		)	(1,938		)
Other, net—affiliate	(307		)	(756		)	(381		)	(295		)
Net cash used in operating activities	(31,861		)	(51,581		)	(52,986		)	(14,126		)

Cash flows from investing activities
Property, plant and equipment, net	(2,228,365		)	(1,629,173		)	(839,498		)	(1,202,502		)
Other	3,705			25,995			(2,143		)	3,789
Net cash used in investing activities	(2,224,660		)	(1,603,178		)	(841,641		)	(1,198,713		)

Cash flows from financing activities
Proceeds from issuances of debt	2,276,800			2,706,000			1,371,674			1,675,800
Repayments of debt	(295,455		)	(1,436,050		)	(558,000		)	(281,455		)
Debt issuance and deferred financing costs	(45,743		)	(23,309		)	(639		)	(45,402		)
Debt extinguishment cost	(9,108		)	(29		)	—			(7,956		)
Capital contributions	323,418			254,120			71,621			323,415
Net cash provided by financing activities	2,249,912			1,500,732			884,656			1,664,402

Net decrease in cash, cash equivalents and restricted cash	(6,609		)	(154,027		)
Net increase (decrease) in cash, cash equivalents and restricted cash							(9,971		)	451,563
Cash, cash equivalents and restricted cash—beginning of period	226,559			270,540			289,141			226,559
Cash, cash equivalents and restricted cash—end of period	$	219,950		$	116,513		$	279,170		$	678,122

Balances per Consolidated Balance Sheet:


	September 30, 2018		June 30, 2019
Cash and cash equivalents	$	—	$	—
Restricted cash	219,950		279,170
Total cash, cash equivalents and restricted cash	$	219,950	$	279,170

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

We are in various stages of developing ~~and constructing~~ natural gas liquefaction and export facilities at the Corpus Christi LNG terminal (the “Liquefaction Facilities”) near Corpus Christi, Texas and a 23-mile natural gas supply pipeline that interconnects the Corpus Christi LNG terminal with several interstate and intrastate natural gas pipelines (the “Corpus Christi Pipeline” and together with the Liquefaction Facilities, the “Liquefaction Project”) through our wholly owned subsidiaries CCL and CCP, respectively. The Liquefaction Project is being developed in ~~stages.~~stages with the first phase being three Trains (“Phase 1”). The first stage includes Trains 1 and 2, two LNG storage tanks, one complete marine berth and a second partial berth and all of the Liquefaction Project’s necessary infrastructure facilities (“Stage 1”). The second stage includes Train 3, one LNG storage tank and the completion of the second partial berth (“Stage 2”). ~~Stages 1 and 2 are currently under construction, and construction of the Corpus Christi Pipeline was completed in the second quarter of 2018.~~ Train 1 ~~has commenced~~is operational, Train 2 is undergoing commissioning ~~activities.~~and Train 3 is under construction.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of CCH have been prepared in accordance with GAAP for interim financial information and with Rule 10-01 of Regulation S-X. 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 Consolidated Financial Statements and accompanying notes included in our annual report on Form 10-K for the year ended December 31, ~~2017~~2018. In our opinion, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation, have been included. Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on our consolidated financial position, results of operations or cash flows.

~~On January 1, 2018, we adopted ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, and subsequent amendments thereto (“ASC 606”) using the full retrospective method. The adoption of ASC 606 represents a change in accounting principle that will provide financial statement readers with enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The adoption of ASC 606 did not impact our previously reported consolidated financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings.

Results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, ~~2018.~~2019.

We are a disregarded entity for federal and state income tax purposes. Our taxable income or loss, which may vary substantially from the net income or loss reported on our Consolidated Statements of Operations, is included in the consolidated federal income tax return of Cheniere. The provision for income taxes, taxes payable and deferred income tax balances have been recorded as if we had filed all tax returns on a separate return basis from Cheniere. Tax elections under a separate return basis may differ from tax elections taken on the consolidated federal income tax return of Cheniere.

Recent Accounting Standards

We adopted ASU 2016-02, Leases (Topic 842), and subsequent amendments thereto on January 1, 2019 using the optional transition approach to apply the standard at the beginning of the first quarter of 2019 with no retrospective adjustments to prior periods. This standard requires a lessee to recognize leases on its balance sheet by recording a lease liability representing the obligation to make future lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. The adoption of the standard did not materially impact our Consolidated Financial Statements. Upon adoption of the standard, we recorded right-of-use assets of $8.1 million in other non-current assets, net, and lease liabilities of $0.5 million in other current liabilities—affiliate, $5.2 million other non-current liabilities and $1.2 million in other non-current liabilities—affiliate.

NOTE 2—RESTRICTED CASH

Restricted cash consists of funds that are contractually and legally restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents on our Consolidated Balance Sheets. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, restricted cash consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018
Current restricted cash
Liquefaction Project	$	279,170	$	289,141

September 30, December 31,
2018 2017
Current restricted cash
Liquefaction Project $ 219,950
$ 226,559

Pursuant to the accounts agreement entered into with the collateral trustee for the benefit of our debt holders, we are required to deposit all cash received into reserve accounts controlled by the collateral trustee. The usage or withdrawal of such cash is restricted to the payment of liabilities related to the Liquefaction Project and other restricted payments.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 3—ACCOUNTS AND OTHER RECEIVABLES

As of June 30, 2019 and December 31, 2018, accounts and other receivables consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018
Trade receivable	$	22,641	$	51
Other accounts receivable	15,935		24,938
Total accounts and other receivables	$	38,576	$	24,989

NOTE 4—INVENTORY

As of June 30, 2019 and December 31, 2018, inventory consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018
Natural gas	$	3,625	$	1,326
LNG	9,496		—
Materials and other	50,153		24,872
Total inventory	$	63,274	$	26,198

NOTE 5—PROPERTY, PLANT AND EQUIPMENT

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, property, plant and equipment, net consisted of the following (in thousands):


	September 30,			December 31,			June 30,			December 31,
	2018			2017			2019			2018
LNG terminal costs
LNG terminal and interconnecting pipeline facilities	$	454,710		$	—		$	6,641,022		$	618,547
LNG site and related costs	40,911			13,844			275,820			44,725
LNG terminal construction-in-process	10,057,318			8,242,520			5,232,298			10,470,577
Accumulated depreciation	(3,696		)	—			(84,565		)	(7,416		)
Total LNG terminal costs, net	10,549,243			8,256,364			12,064,575			11,126,433
Fixed assets
Fixed assets	9,433			6,042			18,321			15,534
Accumulated depreciation	(2,367		)	(1,023		)	(5,238		)	(3,142		)
Total fixed assets, net	7,066			5,019			13,083			12,392
Property, plant and equipment, net	$	10,556,309		$	8,261,383		$	12,077,658		$	11,138,825

Depreciation expense was ~~$3.4~~$57.1 million and ~~$0.3~~$1.4 million during the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$5.1~~$79.4 million and ~~$0.5~~$1.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

We realized offsets to LNG terminal costs of $8.3 million and $82.5 million during the three and six months ended June 30, 2019, respectively, that were related to the sale of commissioning cargoes because these amounts were earned or loaded prior to the start of commercial operations of the Liquefaction Project, during the testing phase for its construction. We did not realize any offsets to LNG terminal costs during the three and six months ended June 30, 2018.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 4—6—DERIVATIVE INSTRUMENTS

We have entered into the following derivative instruments that are reported at fair value:

interest rate swaps (“Interest Rate Derivatives”) to hedge the exposure to volatility in a portion of the ~~variable-rate~~floating-rate interest payments on our credit facility (the “CCH Credit Facility”) and to hedge against changes in interest rates that could impact our anticipated future issuance of debt (“Interest Rate Forward Start Derivatives” and, collectively with the Interest Rate Derivatives, CCH Interest Rate Derivatives”) and

commodity derivatives consisting of natural gas supply contracts for the commissioning and operation of the Liquefaction Project (“Physical Liquefaction Supply Derivatives”) and 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 hedging instruments, and changes in fair value are recorded within our Consolidated Statements of Operations to the extent not utilized for the commissioning process.

The following table shows the fair value of our derivative instruments that are required to be measured at fair value on a recurring basis as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, which are classified as derivative assets, derivative assets—related party, non-current derivative assets, non-current derivative assets—related party, derivative liabilities or non-current derivative liabilities in our Consolidated Balance Sheets (in thousands).:



	Fair Value Measurements as of
	June 30, 2019											December 31, 2018
	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
Interest Rate Derivatives asset (liability)	$	—		$	(88,187	)	$	—	$	(88,187	)	$	—	$	18,069	$	—		$	18,069
Interest Rate Forward Start Derivatives liability	—			(6,640		)	—		(6,640		)	—		—		—			—
Liquefaction Supply Derivatives asset (liability)	(1,219		)	2,992			6,085		7,858			1,299		2,990		(4,357		)	(68		)

Fair Value Measurements as of
September 30, 2018 December 31, 2017

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
Interest Rate Derivatives asset (liability) $ —
$ 94,180
$ —
$ 94,180
$ —
$ (32,258 ) $ —
$ (32,258 )
Liquefaction Supply Derivatives asset (liability) (183 ) 3,217
6,231
9,265
—
—
(91 ) (91 )

~~There have been no changes to our evaluation of and accounting for our derivative positions during the nine months ended September 30, 2018. See~~ ~~Note 5—Derivative Instruments~~ ~~of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2017 for additional information.~~

We value our Interest Rate Derivatives using an income-based approach, utilizing observable inputs to the valuation model including interest rate curves, risk adjusted discount rates, credit spreads and other relevant data. We value our Liquefaction Supply

~~CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

Derivatives using a ~~market based~~market-based approach incorporating present value techniques, as needed, using observable commodity price curves, when available, and other relevant data.

The fair value of our Physical Liquefaction Supply Derivatives is predominantly driven by observable and unobservable market commodity ~~basis~~ prices and, as applicable to our natural gas supply contracts, our assessment of the associated conditions precedent, including evaluating whether the respective market is available as pipeline infrastructure is developed. ~~Upon~~The fair value of our Physical Liquefaction Supply Derivatives incorporates risk premiums related to the satisfaction of conditions precedent, ~~including~~such as completion and placement into service of relevant pipeline infrastructure to accommodate marketable physical gas ~~flow, we recognize a gain or loss based on~~flow. As of June 30, 2019 and December 31, 2018, some of our Physical Liquefaction Supply Derivatives existed within markets for which the ~~fair value of the respective natural~~pipeline infrastructure was under development to accommodate marketable physical gas ~~supply contracts.~~flow.

We include a portion of our Physical Liquefaction Supply Derivatives as Level 3 within the valuation hierarchy as the fair value is developed through the use of internal models which may be impacted by inputs that are unobservable in the marketplace. The curves used to generate the fair value of our Physical Liquefaction Supply Derivatives are based on basis adjustments applied to forward curves for a liquid trading point. In addition, there may be observable liquid market basis information in the near term, but terms of a Physical Liquefaction Supply Derivatives contract may exceed the period for which such information is available, resulting in a Level 3 classification. In these instances, the fair value of the contract incorporates extrapolation assumptions made in the determination of the market basis price for future delivery periods in which applicable commodity basis prices were either not observable or lacked corroborative market data. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, some of our Physical Liquefaction

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Supply Derivatives existed within markets for which the pipeline infrastructure is under development to accommodate marketable physical gas flow.

The Level 3 fair value measurements of natural gas positions within our Physical Liquefaction Supply Derivatives could be materially impacted by a significant change in certain natural gas market basis spreads due to the contractual notional amount represented by our Level 3 positions, which is a substantial portion of our overall Physical Liquefaction Supply Derivatives portfolio. The following table includes quantitative information for the unobservable inputs for our Level 3 Physical Liquefaction Supply Derivatives as of ~~September~~June 30, ~~2018:~~2019:



	Net Fair Value Asset (in thousands)	Valuation Approach	Significant Unobservable Input	Significant Unobservable Inputs Range
Physical Liquefaction Supply Derivatives	$~~6,231~~6,085	Market approach incorporating present value techniques	Henry Hub Basis Spread	$~~(0.748)~~(0.700) - $0.050

The following table shows the changes in the fair value of our Level 3 Physical Liquefaction Supply Derivatives, including those with related parties, during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Balance, beginning of period	$	1,610		$	(207	)	$	(4,357	)	$	(91	)
Realized and mark-to-market gains:
Included in cost of sales	4,369			324			7,733			675
Purchases and settlements:
Purchases	181			(111		)	918			(111		)
Settlements	50			—			2,113			—
Transfers out of Level 3 (1)	(125		)	467			(322		)	—
Balance, end of period	$	6,085		$	473		$	6,085		$	473
Change in unrealized gains (losses) relating to instruments still held at end of period	$	4,369		$	324		$	7,733		$	675

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Balance, beginning of period $ 473
$ (383 ) $ (91 ) $ —
Realized and mark-to-market gains:
Included in operating and maintenance expense 640
678
614
—
Purchases 5,118
—
5,708
295
Balance, end of period $ 6,231
$ 295
$ 6,231
$ 295
Change in unrealized gains (losses) relating to instruments still held at end of period $ 640
$ 678
$ 614
$ —


(1)	Transferred to Level 2 as a result of observable market for the underlying natural gas purchase agreements.

Derivative assets and liabilities arising from our derivative contracts with the same counterparty are reported on a net basis, as all counterparty derivative contracts provide for ~~net settlement.~~the unconditional right of set-off in the event of default. 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 ~~evaluate our own ability~~will be unable to meet our commitments in instances where our derivative instruments are in a liability position. ~~Our~~We incorporate both our own nonperformance risk and the respective counterparty’s nonperformance risk in fair value measurements. In adjusting the fair value of our derivative ~~instruments are subject to contractual provisions which provide~~contracts for the ~~unconditional right~~effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, set-off ~~for all derivative assets~~rights and ~~liabilities with a given counterparty in the event of default.~~guarantees.

CCH Interest Rate Derivatives

InDuring the six months ended June ~~2018,~~30, 2019, there were no changes to the terms of our Interest Rate Derivatives, which we ~~settled~~entered into to protect against volatility of future cash flows and hedge a portion of the ~~Interest Rate Derivatives and recognized a derivative gain of $4.8 million upon the termination of~~variable interest ~~rate swaps associated with the amendment of~~payments on the CCH Credit ~~Facility, as discussed~~Facility.

In June 2019, we entered into the Interest Rate Forward Start Derivatives to hedge against changes in ~~Note 6—Debt~~.interest rates that could impact anticipated future issuance of debt by CCH, which is anticipated by the end of 2020.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

In May 2017, we settled a portion of the Interest Rate Derivatives and recognized a derivative loss of $13.0 million in conjunction with the termination of approximately $1.4 billion of commitments under the CCH Credit Facility.

As of ~~September~~June 30, ~~2018,~~2019, we had the following CCH Interest Rate Derivatives outstanding:

Initial Notional Amount

Maximum Notional Amount

Effective Date

Maturity Date

Weighted Average Fixed Interest Rate Paid

Variable Interest Rate Received

Interest Rate Derivatives

$28.8 million

$4.7 billion

May 20, 2015

May 31, 2022

2.30%

One-month LIBOR

Interest Rate Forward Start Derivatives

$1.0 billion

June 30, 2020

September 30, 2030

2.11%

Three-month LIBOR

The following table shows the fair value and location of our CCH Interest Rate Derivatives on our Consolidated Balance Sheets (in thousands):



	June 30, 2019									December 31, 2018
	Interest Rate Derivatives			Interest Rate Forward Start Derivatives			Total			Interest Rate Derivatives			Interest Rate Forward Start Derivatives		Total
Consolidated Balance Sheet Location
Derivative assets	$	—		$	—		$	—		$	10,556		$	—	$	10,556
Non-current derivative assets	—			—			—			7,918			—		7,918
Total derivative assets	—			—			—			18,474			—		18,474

Derivative liabilities	(20,626		)	—			(20,626		)	(7		)	—		(7		)
Non-current derivative liabilities	(67,561		)	(6,640		)	(74,201		)	(398		)	—		(398		)
Total derivative liabilities	(88,187		)	(6,640		)	(94,827		)	(405		)	—		(405		)

Derivative asset (liability), net	$	(88,187	)	$	(6,640	)	$	(94,827	)	$	18,069		$	—	$	18,069

September 30, December 31,
Consolidated Balance Sheet Location 2018 2017
Derivative assets $ 13,505
$ —
Non-current derivative assets 80,675
2,469
Total derivative assets 94,180
2,469

Derivative liabilities —
(19,609 )
Non-current derivative liabilities —
(15,118 )
Total derivative liabilities —
(34,727 )

Derivative asset (liability), net $ 94,180
$ (32,258 )

The following table shows the changes in the fair value and settlements of our CCH Interest Rate Derivatives recorded in derivative gain (loss), net on our Consolidated Statements of Operations during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Interest Rate Derivatives gain (loss) $ 21,818
$ (2,906 ) $ 119,233
$ (35,002 )



	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Interest Rate Derivatives gain (loss)	$	(67,181	)	$	28,566	$	(102,268	)	$	97,415
Interest Rate Forward Start Derivatives loss	(6,640		)	—		(6,640		)	—

Liquefaction Supply Derivatives

CCL has entered into primarily index-based physical natural gas supply contracts and associated economic hedges to purchase natural gas for the commissioning and operation of the Liquefaction Project. The terms of the physical natural gas supply contracts range up to eight years, some of which commence upon the satisfaction of certain conditions ~~precedent, such as the date of first commercial delivery of specified Trains of the Liquefaction Project.~~precedent.

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, CCL had secured up to approximately ~~2,640~~2,787 TBtu and ~~2,024~~2,801 TBtu, respectively, of natural gas feedstock through natural gas supply contracts, of which 57 TBtu and 55 TBtu, respectively, were for a natural gas supply contract CCL has with a related party. The forward notional for our Liquefaction Supply Derivatives was approximately ~~2,563~~2,905 TBtu and ~~1,019~~2,854 TBtu as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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



	Fair Value Measurements as of (1)
Consolidated Balance Sheet Location	June 30, 2019			December 31, 2018
Derivative assets	$	5,498		$	5,071
Derivative assets—related party	1,807			2,132
Non-current derivative assets	7,678			11,114
Non-current derivative assets—related party	614			3,381
Total derivative assets	15,597			21,698

Derivative liabilities	(4,722		)	(13,569		)
Non-current derivative liabilities	(3,017		)	(8,197		)
Total derivative liabilities	(7,739		)	(21,766		)

Derivative asset (liability), net	$	7,858		$	(68	)

Fair Value Measurements as of (1)
Consolidated Balance Sheet Location September 30, 2018 December 31, 2017
Derivative assets $ 2,503
$ —
Non-current derivative assets 10,416
—
Total derivative assets 12,919

—

Derivative liabilities (213 ) —
Non-current derivative liabilities (3,441 ) (91 )
Total derivative liabilities (3,654 ) (91 )

Derivative asset (liability), net $ 9,265
$ (91 )


(1)	Does not include collateral ~~call~~calls of ~~$1.0~~$4.3 million and $4.5 million for such contracts, which are included in other current assets in our Consolidated Balance ~~Sheet~~Sheets as ~~September~~June 30, ~~2018.~~2019 and December 31, 2018, respectively.

The following table shows the changes in the fair value, settlements and location of our Liquefaction Supply Derivatives ~~recorded in operating and maintenance expense~~ on our Consolidated Statements of Operations during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Liquefaction Supply Derivatives gain $ 10,507
$ 678
$ 9,357
$ 295



		Three Months Ended June 30,						Six Months Ended June 30,
	Consolidated Statements of Operations Location (1)	2019			2018			2019			2018
Liquefaction Supply Derivatives loss	LNG revenues	$	(885	)	$	—		$	(74	)	$	—
Liquefaction Supply Derivatives gain (loss)	Cost of sales	2,752			(1,034		)	10,617			(1,150		)
Liquefaction Supply Derivatives loss	Cost of sales—related party	(1,279		)	—			(3,091		)	—


(1)	Does not include the realized value associated with derivative instruments 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.

Consolidated Balance Sheet Presentation

Our derivative instruments are presented on a net basis on our Consolidated Balance Sheets as described above. The following table shows the fair value of our derivatives outstanding on a gross and net basis (in thousands):



	Gross Amounts Recognized			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amounts Presented in the Consolidated Balance Sheets
Offsetting Derivative Assets (Liabilities)	Gross Amounts Recognized			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amounts Presented in the Consolidated Balance Sheets
As of June 30, 2019
Interest Rate Derivatives	$	(88,659	)	$	472		$	(88,187	)
Interest Rate Forward Start Derivatives	(6,640		)	—			(6,640		)
Liquefaction Supply Derivatives	16,432			(835		)	15,597
Liquefaction Supply Derivatives	(14,300		)	6,561			(7,739		)
As of December 31, 2018
Interest Rate Derivatives	$	19,520		$	(1,046	)	$	18,474
Interest Rate Derivatives	(413		)	8			(405		)
Liquefaction Supply Derivatives	31,770			(10,072		)	21,698
Liquefaction Supply Derivatives	(29,996		)	8,230			(21,766		)

Gross Amounts Recognized Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets
Offsetting Derivative Assets (Liabilities)
As of September 30, 2018
Interest Rate Derivatives $ 94,496
$ (316 ) $ 94,180
Liquefaction Supply Derivatives 14,946
(2,027 ) 12,919
Liquefaction Supply Derivatives (9,283 ) 5,629
(3,654 )
As of December 31, 2017
Interest Rate Derivatives $ 2,808
$ (339 ) $ 2,469
Interest Rate Derivatives (34,747 ) 20
(34,727 )
Liquefaction Supply Derivatives (130 ) 39
(91 )

~~NOTE 5—ACCRUED LIABILITIES~~

~~As of September 30, 2018 and December 31, 2017, accrued liabilities consisted of the following (in thousands):~~

September 30, December 31,
2018 2017
Interest costs and related debt fees $ 64,933
$ 136,283
Liquefaction Project costs 170,741
107,055
Other 20,853
14,722
Total accrued liabilities $ 256,527
$ 258,060

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE ~~6—DEBT~~7—OTHER NON-CURRENT ASSETS

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, other non-current assets, net consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018
Advances and other asset conveyances to third parties to support LNG terminals	$	17,912	$	18,209
Operating lease assets	7,364		—
Tax-related payments and receivables	3,450		3,783
Information technology service assets	2,420		2,435
Advances made under EPC and non-EPC contracts	10,905		—
Other	9,495		7,282
Total other non-current assets, net	$	51,546	$	31,709

NOTE 8—ACCRUED LIABILITIES

As of June 30, 2019 and December 31, 2018, accrued liabilities consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018
Interest costs and related debt fees	$	128,619	$	994
Accrued natural gas purchases	87,990		91,910
Liquefaction Project costs	146,304		46,964
Other	22,295		22,337
Total accrued liabilities	$	385,208	$	162,205

NOTE 9—DEBT

As of June 30, 2019 and December 31, 2018, our debt consisted of the following (in thousands):



	June 30,			December 31,
	2019			2018
Long-term debt
7.000% Senior Secured Notes due 2024 (“2024 CCH Senior Notes”)	$	1,250,000		$	1,250,000
5.875% Senior Secured Notes due 2025 (“2025 CCH Senior Notes”)	1,500,000			1,500,000
5.125% Senior Secured Notes due 2027 (“2027 CCH Senior Notes”)	1,500,000			1,500,000
CCH Credit Facility	6,137,412			5,155,737
Unamortized premium, discount and debt issuance costs, net	(165,815		)	(160,185		)
Total long-term debt, net	10,221,597			9,245,552

Current debt
$1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”)	—			168,000
Total debt, net	$	10,221,597		$	9,413,552

September 30, December 31,
2018 2017
Long-term debt
7.000% Senior Secured Notes due 2024 (“2024 CCH Senior Notes”) $ 1,250,000
$ 1,250,000
5.875% Senior Secured Notes due 2025 (“2025 CCH Senior Notes”) 1,500,000
1,500,000
5.125% Senior Secured Notes due 2027 (“2027 CCH Senior Notes”) 1,500,000
1,500,000
CCH Credit Facility 4,491,737
2,484,737
Unamortized premium, discount and debt issuance costs, net (152,536 ) (65,261 )
Total long-term debt, net 8,589,201
6,669,476

Current debt
$1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”) —
—
Total debt, net $ 8,589,201
$ 6,669,476

~~2018 Debt Issuances~~

~~CCH Credit Facility~~

In May 2018, we amended and restated the CCH Credit Facility to increase total commitments under the credit facility to $6.1 billion. Borrowings are used to fund a portion of the costs of developing, constructing and placing into service the three Trains and the related facilities of the Liquefaction Project and for related business purposes.

The CCH Credit Facility matures on June 30, 2024, with principal payments due quarterly commencing on the earlier of (1) the first quarterly payment date occurring more than three calendar months following the completion of the Liquefaction Project as defined in the common terms agreement and (2) a set date determined by reference to the date under which a certain LNG buyer linked to the last Train of the Liquefaction Project to become operational is entitled to terminate its SPA for failure to achieve the date of first commercial delivery for that agreement. Scheduled repayments will be based upon a 19-year tailored amortization, commencing the first full quarter after the completion of Trains 1 through 3 and designed to achieve a minimum projected fixed debt service coverage ratio of 1.50:1.

Loans under the CCH Credit Facility accrue interest at a variable rate per annum equal to, at our election, LIBOR or the base rate, plus the applicable margin. The applicable margin for LIBOR loans is 1.75% and for base rate loans is 0.75%. Interest on LIBOR loans is due and payable at the end of each applicable interest period and interest on base rate loans is due and payable at the end of each quarter. We were required to pay certain upfront fees to the agents and lenders under the CCH Credit Facility together with additional transaction fees and expenses in the aggregate amount of $53.3 million.

~~All other terms of the CCH Credit Facility substantially remained the same to those described in~~ ~~Note 7—Debt~~ of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2017. The amendment and restatement of the CCH Credit Facility resulted in the recognition of $15.3 million of debt modification and extinguishment costs during the nine months ended September 30, 2018 relating to the incurrence of third party fees and write off of unamortized debt issuance costs.

~~CCH Working Capital Facility~~

In June 2018, we amended and restated the CCH Working Capital Facility to increase total commitments under the CCH Working Capital Facility to $1.2 billion. Borrowings will be used for certain working capital requirements related to developing and placing into operations the Liquefaction Project and for related business purposes.

Loans under the CCH Working Capital Facility accrue interest at a variable rate per annum equal to LIBOR or the base rate plus the applicable margin. The applicable margin for LIBOR loans ranges from 1.25% to 1.75% per annum, and the applicable margin for base rate loans ranges from 0.25% to 0.75% per annum. We were required to pay certain upfront fees to the agents

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

~~and lenders under the CCH Working Capital Facility together with additional transaction fees and expenses in the aggregate amount of $13.8 million.~~

~~The CCH Working Capital Facility matures on June 29, 2023. All other terms of the CCH Working Capital Facility substantially remained the same to those described in~~ ~~Note 7—Debt~~ ~~of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2017.~~

Credit Facilities

Below is a summary of our credit facilities outstanding as of ~~September~~June 30, ~~2018~~2019 (in thousands):



	CCH Credit Facility		CCH Working Capital Facility
Original facility size	$	8,403,714	$	350,000
Incremental commitments	1,565,961		850,000
Less:
Outstanding balance	6,137,412		—
Commitments terminated	3,832,263		—
Letters of credit issued	—		338,037
Available commitment	$	—	$	861,963

Interest rate on outstanding balance	LIBOR plus 1.75% or base rate plus 0.75%		LIBOR plus 1.25% - 1.75% or base rate plus 0.25% - 0.75%
Weighted average interest rate of outstanding balance	4.15%		n/a
Maturity date	June 30, 2024		June 29, 2023

CCH Credit Facility CCH Working Capital Facility
Original facility size $ 8,403,714
$ 350,000
Incremental commitments 1,565,961
850,000
Less:
Outstanding balance 4,491,737
—
Commitments terminated 3,832,263
—
Letters of credit issued —
315,525
Available commitment $ 1,645,675

$ 884,475

Interest rate LIBOR plus 1.75% or base rate plus 0.75% LIBOR plus 1.25% - 1.75% or base rate plus 0.25% - 0.75%
Maturity date June 30, 2024 June 29, 2023

Restrictive Debt Covenants

As of ~~September~~June 30, ~~2018,~~2019, we were in compliance with all covenants related to our debt agreements.

Interest Expense

Total interest expense consisted of the following (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Total interest cost	$	137,970		$	106,619		$	270,633		$	207,814
Capitalized interest, including amounts capitalized as an Allowance for Funds Used During Construction	(64,918		)	(106,619		)	(185,823		)	(207,814		)
Total interest expense, net	$	73,052		$	—		$	84,810		$	—

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Total interest cost $ 117,834
$ 95,204
$ 325,648
$ 263,560
Capitalized interest, including amounts capitalized as an Allowance for Funds Used During Construction (117,834 ) (95,204 ) (325,648 ) (263,560 )
Total interest expense, net $ —
$ —
$ —
$ —

Fair Value Disclosures

The following table shows the carrying amount, which is net of unamortized premium, discount and debt issuance costs, and estimated fair value of our debt (in thousands):


	September 30, 2018				December 31, 2017				June 30, 2019				December 31, 2018
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Senior notes (1)	$	4,189,958	$	4,453,750	$	4,184,739	$	4,590,625	$	4,195,434	$	4,744,100	$	4,191,754	$	4,228,750
Credit facilities (2)	4,399,243		4,399,243		2,484,737		2,484,737		6,026,163		6,026,163		5,221,798		5,221,798


(1)	Includes 2024 CCH Senior Notes, 2025 CCH Senior Notes and 2027 CCH Senior Notes (collectively, the “CCH Senior Notes”). The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of the CCH Senior Notes and other similar instruments.


(2)	Includes CCH Credit Facility and CCH Working Capital Facility. The Level 3 estimated fair value approximates the principal amount because the interest rates are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 7—10—REVENUES FROM CONTRACTS WITH CUSTOMERS

~~We have entered into numerous SPAs~~The following table represents a disaggregation of revenue earned from contracts with ~~third party~~ customers for the sale of LNG on a free on board (“FOB”) (delivered to the customer at the Corpus Christi LNG terminal) basis. Our customers generally purchase LNG for a price consisting of a fixed fee per MMBtu of LNG (a portion of which is subject to annual adjustment for inflation) plus a variable fee per MMBtu of LNG equal to approximately 115% of Henry Hub. The fixed fee component is the amount payable to us regardless of a cancellation or suspension of LNG cargo deliveries by the customers. The variable fee component is the amount generally payable to us only upon delivery of LNG plus all future adjustments to the fixed fee for inflation. The SPAs and contracted volumes to be made available under the SPAs are not tied to a specific Train; however, the term of each SPA generally commences upon the date of first commercial delivery of a specified Train.

Revenues from the sale of LNG are recognized at a point in time when the LNG is delivered to the customer, at the Corpus Christi LNG terminal, which is the point legal title, physical possession and the risks and rewards of ownership transfer to the customer. Each individual molecule of LNG is viewed as a separate performance obligation. The stated contract price (including both fixed and variable fees) per MMBtu in each LNG sales arrangement is representative of the stand-alone selling price for LNG at the time the sale was negotiated. We have concluded that the variable fees meet the exception for allocating variable consideration to specific parts of the contract. As such, the variable consideration for these contracts is allocated to each distinct molecule of LNG and recognized when that distinct molecule of LNG is delivered to the customer. Because of the use of the exception, variable consideration related to the sale of LNG is also not included in the transaction price.

~~Fees received pursuant to SPAs are recognized as LNG revenues only after substantial completion of the respective Train. Prior to substantial completion, sales generated~~ during the ~~commissioning phase are offset against the cost of construction~~three and six months ended June 30, 2019 and 2018 (in thousands):



	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
LNG revenues	$	119,410		$	—	$	131,655		$	—
LNG revenues—affiliate	181,548			—		274,573			—
Total revenues from customers	300,958			—		406,228			—
Net derivative losses (1)	(885		)	—		(74		)	—
Total revenues	$	300,073		$	—	$	406,154		$	—

(1) See Note 6—Derivative Instruments for ~~the respective Train, as the production and removal of LNG from storage is necessary to test the facility and bring the asset to the condition necessary for its intended use.~~additional information about our derivatives.

~~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 as of ~~September~~June 30, 2019 and December 31, 2018:

Unsatisfied
Transaction Price
(in billions)
Weighted Average Recognition Timing (years) (1)
LNG revenues $ 34.8
11.9



	June 30, 2019			December 31, 2018
	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)
LNG revenues	$	33.8	11	$	33.9	12
LNG revenues—affiliate	1.0		14	1.0		14
Total revenues	$	34.8		$	34.9


(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.

We have elected the following exemptions which omit certain potential future sources of revenue from the table above:


(1)	We omit from the table above all performance obligations that are part of a contract that has an original expected duration of one year or less.

(2)

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 table above excludes substantially all variable consideration under our SPAs. 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. ~~The receipt of~~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~~receipt. Approximately 46% of our LNG revenues during each of the three and ~~we have not included such~~six months ended June 30, 2019 were related to variable consideration inreceived from customers. All of our LNG revenues—affiliate were related to variable consideration received from customers during the ~~transaction price.~~three and six months ended June 30, 2019.

~~CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

We have entered into contracts to sell LNG that are conditioned upon one or both of the parties achieving certain milestones such as reaching a final investment decision on a certain liquefaction Train, obtaining financing or achieving substantial completion of a Train and any related facilities. These contracts are considered completed contracts for revenue recognition purposes and are included in the transaction price above when the conditions are considered probable of being met.

We have elected the practical expedient to omit the disclosure of the transaction price allocated to future performance obligations and an explanation of when the entity expects to recognize the amount as revenue as of December 31, 2017.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 8—11—RELATED PARTY TRANSACTIONS

Below is a summary of our related party transactions as reported on our Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenues—affiliate
Cheniere Marketing Agreements	$	181,548	$	—	$	274,573	$	—

Cost of sales—related party
Natural Gas Supply Agreement	24,230		—		35,753		—

Operating and maintenance expense—affiliate
Services Agreements	15,270		355		20,341		588
Land Agreements	189		196		365		429
Total operating and maintenance expense—affiliate	15,459		551		20,706		1,017

Development expense—affiliate
Services Agreements	38		—		38		—

General and administrative expense—affiliate
Services Agreements	2,407		595		3,562		998

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Operating and maintenance expense—affiliate
Services Agreements $ 1,302
$ 1,415
$ 1,890
$ 1,434
Lease Agreements 223
89
652
219
Other Agreements (3 ) —
(3 ) —
Total operating and maintenance expense—affiliate 1,522
1,504
2,539
1,653

Development expense—affiliate
Services Agreements —
—
—
8

General and administrative expense—affiliate
Services Agreements 607
289
1,605
753

We had ~~$19.8~~$19.5 million and ~~$23.8~~$25.1 million due to affiliates as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, under agreements with affiliates, as described below.

LNG Sale and Purchase Agreements

CCL has a fixed price ~~20-year~~ SPA with Cheniere Marketing International LLP (“Cheniere Marketing”) (the “Cheniere Marketing Base SPA”) with a term of 20 years which allows Cheniere Marketing to purchase, at its option, (1) up to a cumulative total of 150 TBtu of LNG within the commissioning periods for Trains 1 through 3, (2) any LNG produced from the end of the commissioning period for Train 1 until the date of first commercial delivery of LNG from Train 1 and (3) any excess LNG produced by the Liquefaction Facilities that is not committed to customers under third-party SPAs. Under the Cheniere Marketing Base SPA, Cheniere Marketing may, without charge, elect to suspend deliveries of cargoes (other than commissioning cargoes) scheduled for any month under the applicable annual delivery program by providing specified notice in advance. Additionally, CCL has a fixed price ~~25-year~~ SPA with an approximate term of 23 years with Cheniere Marketing which allows them to purchase volumes of approximately 15 TBtu per annum of LNG. As of June 30, 2019 and December 31, 2018, CCL had $30.6 million and $21.1 million of accounts receivable—affiliate, respectively, under these agreements.

Services Agreements

Gas and Power Supply Services Agreement (“G&P Agreement”)

CCL has a G&P Agreement with Cheniere Energy Shared Services, Inc. (“Shared Services”), a wholly owned subsidiary of Cheniere, pursuant to which Shared Services will manage the gas and power procurement requirements of CCL. The services include, among other services, exercising the day-to-day management of CCL’s natural gas and power supply requirements, negotiating agreements on CCL’s behalf and providing other administrative services. Prior to the substantial completion of each Train of the Liquefaction Facilities, no monthly fee payment is required except for reimbursement of operating expenses. After substantial completion of each Train of the Liquefaction Facilities, for services performed while the Liquefaction Facilities is operational, CCL will pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $125,000 (indexed for inflation) for services with respect to such Train.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Operation and Maintenance Agreements (“O&M Agreements”)

CCL has an O&M Agreement (“CCL O&M Agreement”) with Cheniere LNG O&M Services, LLC (“O&M Services”), a wholly owned subsidiary of Cheniere, pursuant to which CCL receives all of the necessary services required to construct, operate and maintain the Liquefaction Facilities. The services to be provided include, among other services, preparing and maintaining staffing plans, identifying and arranging for procurement of equipment and materials, overseeing contractors, administering various agreements, information technology services and other services required to operate and maintain the Liquefaction Facilities. Prior to the substantial completion of each Train of the Liquefaction Facilities, no monthly fee payment is required except for reimbursement of operating expenses. After substantial completion of each Train of the Liquefaction Facilities, for services performed while the Liquefaction Facilities is operational, CCL will pay, in addition to the reimbursement of operating expenses, a fixed monthly fee of $125,000 (indexed for inflation) for services with respect to such Train.

CCP has an O&M Agreement (“CCP O&M Agreement”) with O&M Services pursuant to which CCP receives all of the necessary services required to construct, operate and maintain the Corpus Christi Pipeline. The services to be provided include, among other services, preparing and maintaining staffing plans, identifying and arranging for procurement of equipment and materials, overseeing contractors, information technology services and other services required to operate and maintain the Corpus Christi Pipeline. CCP is required to reimburse O&M Services for all operating expenses incurred on behalf of CCP.

Management Services Agreements (“MSAs”)

CCL has an MSA with Shared Services pursuant to which Shared Services manages the construction and operation of the Liquefaction Facilities, excluding those matters provided for under the G&P Agreement and the CCL O&M Agreement. The services include, among other services, exercising the day-to-day management of CCL’s affairs and business, managing CCL’s regulatory matters, preparing status reports, providing contract administration services for all contracts associated with the Liquefaction Facilities and obtaining insurance. Prior to the substantial completion of each Train of the Liquefaction Facilities, no monthly fee payment is required except for reimbursement of expenses. After substantial completion of each Train, CCL will pay, in addition to the reimbursement of related expenses, a monthly fee equal to 3% of the capital expenditures incurred in the previous month and a fixed monthly fee of $375,000 for services with respect to such Train.

CCP has an MSA with Shared Services pursuant to which Shared Services manages CCP’s operations and business, excluding those matters provided for under the CCP O&M Agreement. The services include, among other services, exercising the day-to-day management of CCP’s affairs and business, managing CCP’s regulatory matters, preparing status reports, providing contract administration services for all contracts associated with the Corpus Christi Pipeline and obtaining insurance. CCP is required to reimburse Shared Services for the aggregate of all costs and expenses incurred in the course of performing the services under the MSA.

Natural Gas Supply Agreement

CCL has entered into a natural gas supply contract to obtain feed gas for the operation of the Liquefaction Project through September 2020 with a related party in the ordinary course of business. CCL recorded $24.2 million and $35.8 million in cost of sales—related party under this contract during the three and six months ended June 30, 2019, respectively. Of this amount, $4.2 million and zero was included in accrued liabilities—related party as of June 30, 2019 and December 31, 2018, respectively. CCL did not have any transactions during the three and six months ended June 30, 2018 under this contract. CCL also has recorded derivative assets—related party of $1.8 million and $2.1 million and non-current derivative assets—related party of $0.6 million and $3.4 million as of June 30, 2019 and December 31, 2018, respectively, related to this contract.

Agreements with Midship Pipeline

CCL has entered into a transportation precedent agreement and a negotiated rate agreement with Midship Pipeline Company, LLC (“Midship Pipeline”) to secure firm pipeline transportation capacity for a period of 10 years following commencement of the approximately 200-mile natural gas pipeline project which Midship Pipeline is constructing. In May 2018, CCL issued a letter of credit to Midship Pipeline for drawings up to an aggregate maximum amount of $16.2 million. Midship Pipeline had not made any drawings on this letter of credit as of June 30, 2019.

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Land Agreements

Lease Agreements

CCL has agreements with Cheniere Land Holdings, LLC (“Cheniere Land Holdings”), a wholly owned subsidiary of Cheniere, to lease the land owned by Cheniere Land Holdings for the Liquefaction Facilities. The total annual lease payment is ~~$0.7~~$0.6 million, and the terms of the agreements range from three years to five years.

~~In February 2018,~~ Easement Agreements

CCL ~~entered into~~has agreements with Cheniere Land Holdings which ~~grants~~grant CCL ~~a limited license to use certain roads~~easements on land owned by Cheniere Land Holdings for the Liquefaction Facilities. The total annual ~~lease~~ payment for easement agreements is $0.1 million, excluding any previously paid one-time payments, and the ~~term~~terms of ~~each agreement is~~the agreements range from three years to five years.

In August 2018, CCL entered into an agreement with Cheniere Land Holdings which grants CCL a limited license to use certain land owned by Cheniere Land Holdings for the Liquefaction Facilities. CCL made a one-time payment of $0.5 million under this agreement, and the term of the agreement is three years.

~~We had $0.5 million and $0.2 million as of September 30, 2018 and December 31, 2017, respectively, of prepaid expenses related to these agreements in other current assets—affiliate.~~

~~CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

~~Easement Agreements~~

In May 2018, CCL entered into agreements with Cheniere Land Holdings which grants CCL the right to construct, install and operate waterlines on land owned by Cheniere Land Holdings for the Liquefaction Facilities. During the nine months ended September 30, 2018, CCL paid $0.4 million as equity contributions to Cheniere Land Holdings for the value of these agreements.

~~Special Warranty Deed~~

In May 2018, CCL entered into a special warranty deed agreement with Cheniere Land Holdings whereby land owned by Cheniere Land Holdings was transferred to CCL as a non-cash equity contribution of $20.8 million.

Dredge Material Disposal Agreement

CCL has a dredge material disposal agreement with Cheniere Land Holdings that terminates in 2042 which grants CCL permission to use land owned by Cheniere Land Holdings for the deposit of dredge material from the construction and maintenance of the Liquefaction Facilities. Under the terms of the agreement, CCL will pay Cheniere Land Holdings $0.50 per cubic yard of dredge material deposits up to 5.0 million cubic yards and $4.62 per cubic yard for any quantities above that.

Tug Hosting Agreement

In February 2017, CCL entered into a tug hosting agreement with Corpus Christi Tug Services, LLC (“Tug Services”), a wholly owned subsidiary of Cheniere, to provide certain marine structures, support services and access necessary at the Liquefaction Facilities for Tug Services to provide its customers with tug boat and marine services. Tug Services is required to reimburse CCL for any ~~third party~~third-party costs incurred by CCL in connection with providing the goods and services.

State Tax Sharing Agreements

CCL has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which CCL and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, CCL will pay to Cheniere an amount equal to the state and local tax that CCL would be required to pay if CCL’s state and local tax liability were calculated on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from CCL under this agreement; therefore, Cheniere has not demanded any such payments from CCL. The agreement is effective for tax returns due on or after May 2015.

CCP has a state tax sharing agreement with Cheniere. Under this agreement, Cheniere has agreed to prepare and file all state and local tax returns which CCP and Cheniere are required to file on a combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands payment, CCP will pay to Cheniere an amount equal to the state and local tax that CCP would be required to pay if CCP’s state and local tax liability were calculated on a separate company basis. There have been no state and local taxes paid by Cheniere for which Cheniere could have demanded payment from CCP under this agreement; therefore, Cheniere has not demanded any such payments from CCP. The agreement is effective for tax returns due on or after May 2015.

Equity Contribution Agreements

Equity Contribution Agreement

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

under the Equity Contribution Agreement after the commitments under the CCH Credit Facility have been reduced to zero and to the extent cash flows from operations of the Liquefaction Project are unavailable for Liquefaction Project costs.

~~CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

Early Works Equity Contribution Agreement

In conjunction with the amendment and restatement of the Equity Contribution Agreement, we terminated the early works equity contribution agreement with Cheniere entered into in December 2017. Prior to termination in May 2018, we had received $250.0 million in contributions from Cheniere under the early works equity contribution agreement.

NOTE 9—12—CUSTOMER CONCENTRATION

The following table shows customers with revenues of 10% or greater of total revenues from external customers and customers with accounts receivable balances of 10% or greater of total accounts receivable from external customers:



	Percentage of Total Revenues from External Customers				Percentage of Accounts Receivable from External Customers
	Three Months Ended June 30,		Six Months Ended June 30,		June 30,	December 31,
	2019	2018	2019	2018	2019	2018
Customer A	38%	—%	34%	—%	—%	—%
Customer B	19%	—%	17%	—%	58%	—%

NOTE 13—SUPPLEMENTAL CASH FLOW INFORMATION

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



	Six Months Ended June 30,
	2019		2018
Noncash capital contribution for conveyance of property, plant and equipment from affiliate	$	—	$	51,381

Nine Months Ended September 30,
2018 2017
Cash paid during the period for interest, net of amounts capitalized $ 48,742
$ —
Noncash capital contribution for conveyance of property, plant and equipment from affiliate 51,412
—

The balance in property, plant and equipment, net funded with accounts payable and accrued liabilities (including affiliate) was ~~$285.8~~$269.0 million and ~~$194.2~~$698.7 million as of ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

~~CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

NOTE ~~10—RECENT ACCOUNTING STANDARDS~~

~~The following table provides a brief description of a recent accounting standard that had not been adopted by us as of September 30, 2018:~~

~~CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

~~Additionally, the following table provides a brief description of recent accounting standards that were adopted by us during the reporting period:~~



~~Standard~~	~~Description~~	~~Date of Adoption~~	~~Effect on our Consolidated Financial Statements or Other Significant Matters~~
~~ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606), and subsequent amendments thereto~~	This standard provides a single, comprehensive revenue recognition model which replaces and supersedes most existing revenue recognition guidance and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard requires that the costs to obtain and fulfill contracts with customers should be recognized as assets and amortized to match the pattern of transfer of goods or services to the customer if expected to be recoverable. The standard also requires enhanced disclosures. This guidance may be adopted either retrospectively to each prior reporting period presented subject to allowable practical expedients (“full retrospective approach”) or as a cumulative-effect adjustment as of the date of adoption (“modified retrospective approach”).	~~January 1, 2018~~	We adopted this guidance on January 1, 2018, using the full retrospective method. The adoption of this guidance represents a change in accounting principle that will provide financial statement readers with enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The adoption of this guidance did not impact our previously reported consolidated financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings. See ~~Note 7—Revenues from Contracts with Customers~~ ~~for additional disclosures.~~
~~ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~	This standard requires the immediate recognition of the tax consequences of intercompany asset transfers other than inventory. This guidance may be early adopted, but only at the beginning of an annual period, and must be adopted using a modified retrospective approach.	~~January 1, 2018~~	~~The adoption of this guidance did not have an impact on our Consolidated Financial Statements or related disclosures.~~

~~CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED~~

~~(unaudited)~~

~~NOTE 11—~~14—SUPPLEMENTAL GUARANTOR INFORMATION

Our CCH Senior Notes are jointly and severally guaranteed by our subsidiaries, CCL, CCP and CCP GP (each a “Guarantor” and collectively, the “Guarantors”). These guarantees are full and unconditional, subject to certain customary release provisions including (1) the sale, exchange, disposition or transfer (by merger, consolidation or otherwise) of the capital stock or all or substantially all of the assets of the Guarantors, (2) the designation of the Guarantor as an “unrestricted subsidiary” in accordance with the ~~indenture governing the~~ CCH ~~Senior Notes (the “CCH Indenture”),~~Indenture, (3) upon the legal defeasance or covenant defeasance or discharge of obligations under the CCH Indenture and (4) the release and discharge of the Guarantors pursuant to the Common Security and Account Agreement. See Note 6—9—Debt of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2018 for additional information regarding the CCH Senior Notes.

The following is condensed consolidating financial information for CCH (“Parent Issuer”) and the Guarantors. We did not have any non-guarantor subsidiaries as of ~~September~~June 30, ~~2018.~~2019.

Condensed Consolidating Balance Sheet
September 30, 2018
(in thousands)

Parent Issuer Guarantors Eliminations Consolidated
ASSETS
Current assets
Cash and cash equivalents $ —
$ —
$ —
$ —
Restricted cash 217,993
1,957
—
219,950
Advances to affiliate —
53,845
—
53,845
Inventory —
8,638
—
8,638
Derivative assets 13,505
2,503
—
16,008
Other current assets 320
4,072
—
4,392
Other current assets—affiliate —
498
—
498
Total current assets 231,818
71,513
—
303,331

Property, plant and equipment, net 969,395
9,586,914
—
10,556,309
Debt issuance and deferred financing costs, net 53,465
—
—
53,465
Non-current derivative assets 80,675
10,416
—
91,091
Investments in subsidiaries 9,575,538
—
(9,575,538 ) —
Other non-current assets, net —
29,841
—
29,841
Total assets $ 10,910,891
$ 9,698,684
$ (9,575,538 ) $ 11,034,037

LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable $ 73
$ 25,231
$ —
$ 25,304
Accrued liabilities 65,075
191,452
—
256,527
Due to affiliates —
19,846
—
19,846
Derivative liabilities —
213
—
213
Total current liabilities 65,148
236,742
—
301,890

Long-term debt, net 8,589,201
—
—
8,589,201
Non-current derivative liabilities —
3,441
—
3,441
Deferred tax liability —
4,209
(4,209 ) —

Member’s equity 2,256,542
9,454,292
(9,571,329 ) 2,139,505
Total liabilities and member’s equity $ 10,910,891
$ 9,698,684
$ (9,575,538 ) $ 11,034,037

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

																			Condensed Consolidating Balance Sheet
December 31, 2017
June 30, 2019										June 30, 2019
(in thousands)

	Parent Issuer		Guarantors		Eliminations			Consolidated		Parent Issuer		Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	—	$	—	$	—		$	—	$	—	$	—	$	—		$	—
Restricted cash	226,559		—		—			226,559		271,057		8,113		—			279,170
Accounts and other receivables										—		38,576		—			38,576
Accounts receivable—affiliate										—		30,613		—			30,613
Advances to affiliate	—		31,486		—			31,486		—		69,140		—			69,140
Inventory										—		63,274		—			63,274
Derivative assets										—		5,498		—			5,498
Derivative assets—related party										—		1,807		—			1,807
Other current assets	246		1,248		—			1,494		352		20,254		—			20,606
Other current assets—affiliate	—		191		(1		)	190		—		33		(2		)	31
Total current assets	226,805		32,925		(1		)	259,729		271,409		237,308		(2		)	508,715

Property, plant and equipment, net	651,687		7,609,696		—			8,261,383		1,272,273		10,805,385		—			12,077,658
Debt issuance and deferred financing costs, net	98,175		—		—			98,175		17,788		—		—			17,788
Non-current derivative assets	2,469		—		—			2,469		—		7,678		—			7,678
Non-current derivative assets—related party										—		614		—			614
Investments in subsidiaries	7,648,111		—		(7,648,111		)	—		10,968,324		—		(10,968,324		)	—
Other non-current assets, net	—		38,124		—			38,124		—		51,546		—			51,546
Total assets	$	8,627,247	$	7,680,745	$	(7,648,112	)	$	8,659,880	$	12,529,794	$	11,102,531	$	(10,968,326	)	$	12,663,999

LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable	$	82	$	6,379	$	—		$	6,461	$	365	$	28,831	$	—		$	29,196
Accrued liabilities	136,389		121,671		—			258,060		129,154		256,054		—			385,208
Accrued liabilities—related party										—		4,174		—			4,174
Due to affiliates	—		23,789		—			23,789		140		19,311		—			19,451
Derivative liabilities	19,609		—		—			19,609		20,626		4,722		—			25,348
Other current liabilities										—		1,106		—			1,106
Other current liabilities—affiliate										—		506		—			506
Total current liabilities	156,080		151,839		—			307,919		150,285		314,704		—			464,989

Long-term debt, net	6,669,476		—		—			6,669,476		10,221,597		—		—			10,221,597
Non-current derivative liabilities	15,118		91		—			15,209		74,201		3,017		—			77,218
Deferred tax liability	—		2,983		(2,983		)	—
Deferred tax liabilities										—		3,645		(3,645		)	—
Other non-current liabilities										—		6,775		—			6,775
Other non-current liabilities—affiliate										—		846		—			846

Member’s equity	1,786,573		7,525,832		(7,645,129		)	1,667,276		2,083,711		10,773,544		(10,964,681		)	1,892,574
Total liabilities and member’s equity	$	8,627,247	$	7,680,745	$	(7,648,112	)	$	8,659,880	$	12,529,794	$	11,102,531	$	(10,968,326	)	$	12,663,999

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Balance Sheet
December 31, 2018
(in thousands)

	Parent Issuer		Guarantors		Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	—	$	—	$	—		$	—
Restricted cash	282,248		6,893		—			289,141
Accounts and other receivables	—		24,989		—			24,989
Accounts receivable—affiliate	—		21,060		—			21,060
Advances to affiliate	—		94,397		—			94,397
Inventory	—		26,198		—			26,198
Derivative assets	10,556		5,071		—			15,627
Derivative assets—related party	—		2,132		—			2,132
Other current assets	178		15,039		—			15,217
Other current assets—affiliate	—		634		(1		)	633
Total current assets	292,982		196,413		(1		)	489,394

Property, plant and equipment, net	1,094,671		10,044,154		—			11,138,825
Debt issuance and deferred financing costs, net	38,012		—		—			38,012
Non-current derivative assets	7,917		11,115		—			19,032
Non-current derivative assets—related party	—		3,381		—			3,381
Investments in subsidiaries	10,194,296		—		(10,194,296		)	—
Other non-current assets, net	1		31,708		—			31,709
Total assets	$	11,627,879	$	10,286,771	$	(10,194,297	)	$	11,720,353

LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable	$	71	$	16,131	$	—		$	16,202
Accrued liabilities	1,242		160,963		—			162,205
Current debt	168,000		—		—			168,000
Due to affiliates	—		25,086		—			25,086
Derivative liabilities	6		13,570		—			13,576
Total current liabilities	169,319		215,750		—			385,069

Long-term debt, net	9,245,552		—		—			9,245,552
Non-current derivative liabilities	398		8,197		—			8,595
Deferred tax liability	—		2,008		(2,008		)	—

Member’s equity	2,212,610		10,060,816		(10,192,289		)	2,081,137
Total liabilities and member’s equity	$	11,627,879	$	10,286,771	$	(10,194,297	)	$	11,720,353

Condensed Consolidating Statement of Operations
Three Months Ended September 30, 2018
(in thousands)

Parent Issuer Guarantors Eliminations Consolidated

Revenues $ —
$ —
$ —
$ —

Expenses
Operating and maintenance expense (recovery) —
(9,477 ) —
(9,477 )
Operating and maintenance expense—affiliate —
1,522
—
1,522
Development expense —
49
—
49
General and administrative expense 450
1,029
—
1,479
General and administrative expense—affiliate —
607
—
607
Depreciation and amortization expense 89
3,399
—
3,488
Impairment expense and gain on disposal of assets —
(13 ) —
(13 )
Total expenses (recoveries) 539
(2,884 ) —
(2,345 )

Income (loss) from operations (539 ) 2,884
—
2,345

Other income (expense)
Derivative gain, net 21,818
—
—
21,818
Other income 220
80
(75 ) 225
Total other income 22,038
80
(75 ) 22,043

Net income $ 21,499
$ 2,964
$ (75 ) $ 24,388

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

																									Condensed Consolidating Statement of Operations
Three Months Ended September 30, 2017
Three Months Ended June 30, 2019													Three Months Ended June 30, 2019
(in thousands)

	Parent Issuer			Guarantors			Eliminations			Consolidated			Parent Issuer			Guarantors			Eliminations			Consolidated

Revenues	$	—		$	—		$	—		$	—
LNG revenues													$	—		$	118,525		$	—		$	118,525
LNG revenues—affiliate													—			181,548			—			181,548
Total revenues													—			300,073			—			300,073

Expenses
Operating costs and expenses
Cost of sales (excluding depreciation and amortization expense shown separately below)													—			181,136			—			181,136
Cost of sales—related party													—			24,230			—			24,230
Operating and maintenance expense	—			533			—			533			—			60,817			—			60,817
Operating and maintenance expense—affiliate	—			1,516			(12		)	1,504			—			15,459			—			15,459
Development expense	—			82			—			82			—			532			—			532
Development expense—affiliate													—			38			—			38
General and administrative expense	192			669			—			861			486			1,056			—			1,542
General and administrative expense—affiliate	—			289			—			289			—			2,407			—			2,407
Depreciation and amortization expense	—			248			—			248			6,079			51,221			—			57,300
Impairment expense and loss on disposal of assets	—			2,059			—			2,059
Total expenses	192			5,396			(12		)	5,576
Total operating costs and expenses													6,565			336,896			—			343,461

Loss from operations	(192		)	(5,396		)	12			(5,576		)	(6,565		)	(36,823		)	—			(43,388		)

Other income (expense)
Interest expense, net of capitalized interest													(73,052		)	—			—			(73,052		)
Derivative loss, net	(2,906		)	—			—			(2,906		)	(73,821		)	—			—			(73,821		)
Other income (expense)	(97		)	3,722			(3,720		)	(95		)
Other income—affiliate	—			12			(12		)	—
Other expense													1,285			81			(12		)	1,354
Total other income (expense)	(3,003		)	3,734			(3,732		)	(3,001		)	(145,588		)	81			(12		)	(145,519		)

Loss before income taxes	(3,195		)	(1,662		)	(3,720		)	(8,577		)	(152,153		)	(36,742		)	(12		)	(188,907		)
Income tax provision	—			(3,677		)	3,677			—			—			(2,541		)	2,541			—
Net loss	$	(3,195	)	$	(5,339	)	$	(43	)	$	(8,577	)	$	(152,153	)	$	(39,283	)	$	2,529		$	(188,907	)

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

																									Condensed Consolidating Statement of Operations
Nine Months Ended September 30, 2018
Three Months Ended June 30, 2018													Three Months Ended June 30, 2018
(in thousands)

	Parent Issuer			Guarantors			Eliminations			Consolidated			Parent Issuer			Guarantors			Eliminations			Consolidated

Revenues	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

Expenses
Operating and maintenance expense recovery	—			(6,377		)	—			(6,377		)
Operating costs and expenses
Cost of sales (excluding depreciation and amortization expense shown separately below)													—			1,031			—			1,031
Operating and maintenance expense													—			1,103			—			1,103
Operating and maintenance expense—affiliate	—			2,539			—			2,539			—			551			—			551
Development expense	—			172			—			172			—			89			—			89
General and administrative expense	999			2,515			—			3,514			450			735			—			1,185
General and administrative expense—affiliate	—			1,605			—			1,605			—			595			—			595
Depreciation and amortization expense	114			5,132			—			5,246			12			1,375			—			1,387
Impairment expense and gain on disposal of assets	—			(13		)	—			(13		)
Total expenses	1,113			5,573			—			6,686			462			5,479			—			5,941

Loss from operations	(1,113		)	(5,573		)	—			(6,686		)	(462		)	(5,479		)	—			(5,941		)

Other income (expense)
Loss on modification or extinguishment of debt	(15,332		)	—			—			(15,332		)	(15,332		)	—			—			(15,332		)
Derivative gain, net	119,233			—			—			119,233			28,566			—			—			28,566
Other income	177			7,833			(7,826		)	184			25			3,277			(3,276		)	26
Total other income	104,078			7,833			(7,826		)	104,085			13,259			3,277			(3,276		)	13,260

Income before income taxes	102,965			2,260			(7,826		)	97,399
Income (loss) before income taxes													12,797			(2,202		)	(3,276		)	7,319
Income tax provision	—			(1,225		)	1,225			—			—			(328		)	328			—
Net income	$	102,965		$	1,035		$	(6,601	)	$	97,399
Net income (loss)													$	12,797		$	(2,530	)	$	(2,948	)	$	7,319

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

																									Condensed Consolidating Statement of Operations
Nine Months Ended September 30, 2017
Six Months Ended June 30, 2019													Six Months Ended June 30, 2019
(in thousands)

	Parent Issuer			Guarantors			Eliminations			Consolidated			Parent Issuer			Guarantors			Eliminations			Consolidated

Revenues	$	—		$	—		$	—		$	—
LNG revenues													$	—		$	131,581		$	—		$	131,581
LNG revenues—affiliate													—			274,573			—			274,573
Total revenues													—			406,154			—			406,154

Expenses
Operating costs and expenses
Cost of sales (excluding depreciation and amortization expense shown separately below)													—			238,665			—			238,665
Cost of sales—related party													—			35,753			—			35,753
Operating and maintenance expense	—			2,097			—			2,097			—			92,672			—			92,672
Operating and maintenance expense—affiliate	—			1,653			—			1,653			—			20,706			—			20,706
Development expense	—			497			—			497			—			532			—			532
Development expense—affiliate	—			8			—			8			—			38			—			38
General and administrative expense	832			2,992			—			3,824			897			2,182			—			3,079
General and administrative expense—affiliate	—			753			—			753			—			3,562			—			3,562
Depreciation and amortization expense	—			537			—			537			8,144			71,480			—			79,624
Impairment expense and loss on disposal of assets	—			2,064			—			2,064
Total expenses	832			10,601			—			11,433
Impairment expense and gain on disposal of assets													—			313			—			313
Total operating costs and expenses													9,041			465,903			—			474,944

Loss from operations	(832		)	(10,601		)	—			(11,433		)	(9,041		)	(59,749		)	—			(68,790		)

Other income (expense)
Loss on modification or extinguishment of debt	(32,480		)	—			—			(32,480		)
Interest expense, net of capitalized interest													(84,810		)	—			—			(84,810		)
Derivative loss, net	(35,002		)	—			—			(35,002		)	(108,908		)	—			—			(108,908		)
Other income (expense)	(182		)	11,540			(11,535		)	(177		)
Other income													2,178			230			(84		)	2,324
Total other income (expense)	(67,664		)	11,540			(11,535		)	(67,659		)	(191,540		)	230			(84		)	(191,394		)

Income (loss) before income taxes	(68,496		)	939			(11,535		)	(79,092		)
Loss before income taxes													(200,581		)	(59,519		)	(84		)	(260,184		)
Income tax provision	—			(3,677		)	3,677			—			—			(1,637		)	1,637			—
Net loss	$	(68,496	)	$	(2,738	)	$	(7,858	)	$	(79,092	)	$	(200,581	)	$	(61,156	)	$	1,553		$	(260,184	)

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2018
(in thousands)

	Parent Issuer			Guarantors			Eliminations			Consolidated

Revenues	$	—		$	—		$	—		$	—

Operating costs and expenses
Cost of sales (excluding depreciation and amortization expense shown separately below)	—			1,147			—			1,147
Operating and maintenance expense	—			1,953			—			1,953
Operating and maintenance expense—affiliate	—			1,017			—			1,017
Development expense	—			123			—			123
General and administrative expense	549			1,486			—			2,035
General and administrative expense—affiliate	—			998			—			998
Depreciation and amortization expense	25			1,733			—			1,758
Total operating costs and expenses	574			8,457			—			9,031

Loss from operations	(574		)	(8,457		)	—			(9,031		)

Other income (expense)
Loss on modification or extinguishment of debt	(15,332		)	—			—			(15,332		)
Derivative gain, net	97,415			—			—			97,415
Other income (expense)	(43		)	7,753			(7,751		)	(41		)
Total other income	82,040			7,753			(7,751		)	82,042

Income (loss) before income taxes	81,466			(704		)	(7,751		)	73,011
Income tax provision	—			(1,225		)	1,225			—
Net income (loss)	$	81,466		$	(1,929	)	$	(6,526	)	$	73,011

Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2018
(in thousands)

Parent Issuer Guarantors Eliminations Consolidated
Cash flows used in operating activities $ (8,075 ) $ (23,786 ) $ —
$ (31,861 )

Cash flows from investing activities
Property, plant and equipment, net (374,390 ) (1,853,975 ) —
(2,228,365 )
Investments in subsidiaries (1,876,013 ) —
1,876,013
—
Other —
3,705
—
3,705
Net cash used in investing activities (2,250,403 ) (1,850,270 ) 1,876,013
(2,224,660 )

Cash flows from financing activities
Proceeds from issuances of debt 2,276,800
—
—
2,276,800
Repayments of debt (295,455 ) —
—
(295,455 )
Debt issuance and deferred financing costs (45,743 ) —
—
(45,743 )
Debt extinguishment cost (9,108 ) —
—
(9,108 )
Capital contributions 323,418
1,876,013
(1,876,013 ) 323,418
Net cash provided by financing activities 2,249,912
1,876,013
(1,876,013 ) 2,249,912

Net increase (decrease) in cash, cash equivalents and restricted cash (8,566 ) 1,957
—
(6,609 )
Cash, cash equivalents and restricted cash—beginning of period 226,559
—
—
226,559
Cash, cash equivalents and restricted cash—end of period $ 217,993
$ 1,957
$ —
$ 219,950

~~Balances per Condensed Consolidating Balance Sheet:~~

September 30, 2018
Parent Issuer Guarantors Eliminations Consolidated
Cash and cash equivalents $ —
$ —
$ —
$ —
Restricted cash 217,993
1,957
—
219,950
Total cash, cash equivalents and restricted cash $ 217,993
$ 1,957
$ —
$ 219,950

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2019
(in thousands)

	Parent Issuer			Guarantors			Eliminations			Consolidated
Cash flows used in operating activities	$	(16,351	)	$	(18,351	)	$	(18,284	)	$	(52,986	)

Cash flows from investing activities
Property, plant and equipment, net	(87,327		)	(752,171		)	—			(839,498		)
Investments in subsidiaries	(1,313,687		)	—			1,313,687			—
Distributions received from affiliates	521,518			—			(521,518		)	—
Other	—			(2,143		)	—			(2,143		)
Net cash used in investing activities	(879,496		)	(754,314		)	792,169			(841,641		)

Cash flows from financing activities
Proceeds from issuances of debt	1,371,674			—			—			1,371,674
Repayments of debt	(558,000		)	—			—			(558,000		)
Debt issuance and deferred financing costs	(639		)	—			—			(639		)
Capital contributions	71,621			1,313,687			(1,313,687		)	71,621
Distributions	—			(539,802		)	539,802			—
Net cash provided by financing activities	884,656			773,885			(773,885		)	884,656

Net increase (decrease) in cash, cash equivalents and restricted cash	(11,191		)	1,220			—			(9,971		)
Cash, cash equivalents and restricted cash—beginning of period	282,248			6,893			—			289,141
Cash, cash equivalents and restricted cash—end of period	$	271,057		$	8,113		$	—		$	279,170

Balances per Condensed Consolidating Balance Sheet:

Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2017
(in thousands)

Parent Issuer Guarantors Eliminations Consolidated
Cash flows used in operating activities $ (43,315 ) $ (8,266 ) $ —
$ (51,581 )

Cash flows from investing activities
Property, plant and equipment, net (227,143 ) (1,402,030 ) —
(1,629,173 )
Investments in subsidiaries (1,384,301 ) —
1,384,301
—
Other —
25,995
—
25,995
Net cash used in investing activities (1,611,444 ) (1,376,035 ) 1,384,301
(1,603,178 )

Cash flows from financing activities
Proceeds from issuances of debt 2,706,000
—
—
2,706,000
Repayments of debt (1,436,050 ) —
—
(1,436,050 )
Debt issuance and deferred financing costs (23,309 ) —
—
(23,309 )
Debt extinguishment cost (29 ) —
—
(29 )
Capital contributions 254,120
1,384,458
(1,384,458 ) 254,120
Distributions —
(157 ) 157
—
Net cash provided by financing activities 1,500,732
1,384,301
(1,384,301 ) 1,500,732

Net decrease in cash, cash equivalents and restricted cash (154,027 ) —
—
(154,027 )
Cash, cash equivalents and restricted cash—beginning of period 270,540
—
—
270,540
Cash, cash equivalents and restricted cash—end of period $ 116,513
$ —
$ —
$ 116,513



	June 30, 2019
	Parent Issuer		Guarantors		Eliminations		Consolidated
Cash and cash equivalents	$	—	$	—	$	—	$	—
Restricted cash	271,057		8,113		—		279,170
Total cash, cash equivalents and restricted cash	$	271,057	$	8,113	$	—	$	279,170

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)



Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2018
(in thousands)

	Parent Issuer			Guarantors			Eliminations			Consolidated
Cash flows used in operating activities	$	(5,975	)	$	(8,151	)	$	—		$	(14,126	)

Cash flows from investing activities
Property, plant and equipment, net	(201,944		)	(1,000,558		)	—			(1,202,502		)
Investments in subsidiaries	(1,005,925		)	—			1,005,925			—
Other	—			3,789			—			3,789
Net cash used in investing activities	(1,207,869		)	(996,769		)	1,005,925			(1,198,713		)

Cash flows from financing activities
Proceeds from issuances of debt	1,675,800			—			—			1,675,800
Repayments of debt	(281,455		)	—			—			(281,455		)
Debt issuance and deferred financing costs	(45,402		)	—			—			(45,402		)
Debt extinguishment cost	(7,956		)	—			—			(7,956		)
Capital contributions	323,415			1,005,925			(1,005,925		)	323,415
Net cash provided by financing activities	1,664,402			1,005,925			(1,005,925		)	1,664,402

Net increase in cash, cash equivalents and restricted cash	450,558			1,005			—			451,563
Cash, cash equivalents and restricted cash—beginning of period	226,559			—			—			226,559
Cash, cash equivalents and restricted cash—end of period	$	677,117		$	1,005		$	—		$	678,122


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.”~~statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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 proposed LNG terminal, liquefaction facilities, pipeline facilities or other projects, or any expansions or portions thereof, by certain dates, or at all;

statements regarding future levels of domestic and international natural gas production, supply or consumption or future levels of LNG imports into or exports from North America and other countries worldwide or purchases of natural gas, regardless of the source of such information, or the transportation or other infrastructure or demand for and prices related to natural gas, LNG or other hydrocarbon products;

statements regarding any financing transactions or arrangements, or our ability to enter into such transactions;

statements relating to the construction of our Trains and pipeline, including statements concerning the engagement of any EPC contractor or other contractor and the anticipated terms and provisions of any agreement with any ~~such~~ EPC or other contractor, and anticipated costs related thereto;

statements regarding any SPA or other agreement to be entered into or performed substantially in the future, including any revenues anticipated to be received and the anticipated timing thereof, and statements regarding the amounts of total natural gas liquefaction or storage capacities that are, or may become, subject to contracts;

statements regarding counterparties to our commercial contracts, construction contracts, and other contracts;

statements regarding our planned development and construction of additional Trains and ~~pipeline,~~pipelines, including the financing of such ~~Trains;~~Trains and pipelines;

statements that our Trains, when completed, will have certain characteristics, including amounts of liquefaction capacities;

statements regarding our business strategy, our strengths, our business and operation plans or any other plans, forecasts, projections, or objectives, including anticipated revenues, capital expenditures, maintenance and operating costs and cash flows, any or all of which are subject to change;

statements regarding legislative, governmental, regulatory, administrative or other public body actions, approvals, requirements, permits, applications, filings, investigations, proceedings or decisions; and

any other statements that relate to non-historical or future information.

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,” ~~“expect,” “plan,” “project,” “intend,~~“achieve,” “anticipate,” “believe,” “contemplate,” “continue,” “estimate,” “expect,” “intend,” “plan,” “potential,” “predict,” ~~“potential,~~“project,” “pursue,” “target,~~” “continue,~~” 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 year ended December 31, ~~2017~~2018. 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.

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 Consolidated 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 of Business

Overview of Significant Events

Liquidity and Capital Resources

Results of Operations

Off-Balance Sheet Arrangements

Summary of Critical Accounting Estimates

Recent Accounting Standards

Overview of Business

We were formed in September 2014 to develop, construct, operate, maintain and own natural gas liquefaction and export facilities (the “Liquefaction Facilities”) and a 23-mile natural gas supply pipeline that interconnects the Corpus Christi LNG terminal with several interstate and intrastate natural gas pipelines (the “Corpus Christi Pipeline” and together with the Liquefaction Facilities, the “Liquefaction Project”) near Corpus Christi, Texas, through our wholly-owned subsidiaries CCL and CCP, respectively. The liquefaction of natural gas into LNG allows it to be shipped economically from the United States where natural gas is abundant and inexpensive to produce to our international customers in areas where natural gas demand and infrastructure exist.

The Liquefaction Project is being developed in stages ~~for~~with the first phase being three Trains with expected aggregate nominal production capacity, which is prior to adjusting for planned maintenance, production reliability, potential overdesign and debottlenecking opportunities, of approximately 13.5 mtpa of LNG,(“Phase 1”), three LNG storage tanks with aggregate capacity of approximately 10.1 Bcfe and two marine berths that can each accommodate vessels with nominal capacity of up to 266,000 cubic meters. The first stage (“Stage 1”) includes Trains 1 and 2, two LNG storage tanks, one complete marine berth and a second partial berth and all of the Liquefaction Project’s necessary infrastructure facilities. The second stage (“Stage 2”) includes Train 3, one LNG storage tank and the completion of the second partial berth. The Liquefaction Project also includes the Corpus Christi Pipeline that will interconnect the Corpus Christi LNG terminal with several interstate and intrastate natural gas pipelines. Stages 1 and 2 are currently under construction, and construction of the Corpus Christi Pipeline was completed in the second quarter of 2018. Train 1 ~~has commenced~~is operational, Train 2 is undergoing commissioning ~~activities.~~and Train 3 is under construction. Each Train is expected to have a nominal production capacity, which is prior to adjusting for planned maintenance, production reliability, potential overdesign and debottlenecking opportunities, of approximately 4.5 mtpa of LNG per Train.

Overview of Significant Events

Our significant accomplishments since January 1, ~~2018~~2019 and through the filing date of this Form 10-Q include the following:

~~Strategic~~Operational

As of July 31, 2019, over 40 cumulative LNG cargoes have been produced, loaded and exported from the Liquefaction Project.

In ~~May 2018, Cheniere’s board of directors made a positive final investment decision with respect to Stage~~June 2019, first LNG production from Train 2 of the Liquefaction Project occurred, and ~~issued a full notice to proceed to Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) under~~ the ~~EPC contract for Stage 2.~~first commissioning cargo from Train 2 was exported.

In February ~~2018,~~2019, CCL ~~entered into a 20-year SPA with PetroChina International Company Limited, a subsidiary~~achieved substantial completion of ~~China National Petroleum Corporation, for~~Train 1 of the ~~sale of LNG beginning in 2023.~~Liquefaction Project and commenced operating activities.

~~Operational~~Financial

In ~~August 2018, feed gas~~June 2019, the date of first commercial delivery was ~~introduced~~reached under the 20-year SPAs with Endesa S.A. and PT Pertamina (Persero) relating to Train 1 of the Liquefaction ~~Project as part of the commissioning process.~~

~~Financial~~

~~We completed the following debt transactions:~~Project.

◦•

In ~~May 2018,~~June 2019, we ~~amended~~ and ~~restated~~ our ~~existing credit facilities~~subsidiaries, as guarantors, entered into a note purchase agreement (“CCH Note Purchase Agreement”) with Allianz Global Investors GmbH to issue an aggregate principal amount of $727 million of 4.80% Senior Secured Notes due 2039 (the ~~“CCH Credit Facility”) to increase total commitments under the~~“2039 CCH ~~Credit Facility to $6.1 billion. Borrowings will be used to fund a portion~~Senior Notes”), with closing and funding of the 2039 CCH Senior Notes

~~costs of developing, constructing and placing into service~~conditional in part on the ~~three Trains and the related facilities~~2039 CCH Senior Notes receiving at least two investment grade ratings within 18 months of the ~~Liquefaction Project and for related business purposes.~~

~~In June 2018, we amended and restated our working capital facility (“CCH Working Capital Facility”) to increase total commitments under~~date of the CCH Working Capital Facility to $1.2 billion. Borrowings will be used for certain working capital requirements related to developing and placing into operations the Liquefaction Project and for related business purposes.Note Purchase Agreement.

Liquidity and Capital Resources

The following table provides a summary of our liquidity position at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 (in thousands):


	September 30,		December 31,		June 30,		December 31,
	2018		2017		2019		2018
Cash and cash equivalents	$	—	$	—	$	—	$	—
Restricted cash designated for the Liquefaction Project	219,950		226,559		279,170		289,141
Available commitments under the following credit facilities:
CCH Credit Facility	1,645,675		2,086,714
CCH Working Capital Facility	884,475		186,422
Amended and restated CCH Credit Facility (“CCH Credit Facility”)					—		981,675
$1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”)					861,963		716,475

For additional information regarding our debt agreements, see Note 6—9—Debt of our Notes to Consolidated Financial Statements in this quarterly report and Note 7—9—Debt of our Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Corpus Christi LNG Terminal

Liquefaction Facilities

~~The~~We are in various stages of constructing and operating the Liquefaction Project ~~is being developed and constructed~~ at the Corpus Christi LNG terminal. We have received authorization from the FERC to site, construct and operate Stages 1 and 2 of the Liquefaction Project. We achieved substantial completion of Train 1 of the Liquefaction Project and commenced operating activities in February 2019. The following table summarizes the overall project status of the Liquefaction Project as of ~~September~~June 30, ~~2018:~~2019:


	Stage 1		Stage 2		Stage 1		Stage 2
Overall project completion percentage	93.9%		36.3%		99.5%		62.4%
Completion percentage of:
Engineering	100%		79.2%		100%		94.3%
Procurement	100%		57.3%		100%		92.5%
Subcontract work	83.6%		5.8%		96.4%		12.2%
Construction	86.9%		5.9%		99.2%		29.2%
Expected date of substantial completion	Train 1	1Q 2019	Train 3	2H 2021	Train 2	3Q 2019	Train 3	2H 2021
	Train 2	2H 2019

The DOE has authorized the export of domestically produced LNG by vessel from the Corpus Christi LNG terminal to FTA countries for a 25-year term and to non-FTA countries for a 20-year term up to a combined total of the equivalent of 767 Bcf/yr (approximately 15 mtpa) of natural gas. The terms of each of these authorizations begin on the earlier of the date of first export thereunder or the date specified in the particular order, which ranges from seven to 10 years from the date the order was issued.

Customers

CCL has entered into ~~ten fixed-price~~fixed price SPAs generally with terms of 20 years (plus extension rights) with nine third parties for Trains 1 through 3 of the Liquefaction Project to make available an aggregate amount of LNG that is between approximately 75% to 85% of the expected aggregate adjusted nominal production capacity ~~of Trains 1 through 3.~~from these Trains. Under these ~~ten~~ SPAs, the customers will purchase LNG from CCL for a price consisting of a fixed fee per MMBtu of LNG (a portion of which is subject to annual adjustment for inflation) plus a variable fee per MMBtu of LNG equal to approximately 115% of Henry Hub. In certain circumstances, the customers may elect to cancel or suspend deliveries of LNG cargoes, in which case the customers would still be required to pay the fixed fee with respect to the contracted volumes that are not delivered as a result of such cancellation or suspension. We refer to the fee component that is applicable regardless of a cancellation or suspension of LNG cargo deliveries under the SPAs as the fixed fee component of the price under our SPAs. We refer to the fee component that is applicable only in connection with LNG cargo deliveries as the variable fee

component of the price under our SPAs. The variable fee under CCL’s SPAs entered into in connection with the development of the Liquefaction Project was sized at the time of entry into each SPA with the intent to cover the costs of gas purchases and transportation related to, and operating and maintenance costs to produce, the LNG to be sold under each such SPA. The SPAs and contracted volumes to be made available under the SPAs are not tied to a specific Train; however,

the term of each SPA generally commences upon the date of first commercial delivery for the applicable Train, as specified in each SPA.

In aggregate, the minimum fixed fee portion to be paid by the third-party SPA customers is approximately $550 million for Train 1, ~~and~~ increasing to approximately $1.4 billion ~~for Train 2, in each case~~ upon the date of first commercial delivery for ~~the respective~~ Train 2 and further increasing to approximately $1.8 billion following the substantial completion of Train 3 of the Liquefaction Project.

~~CCL expects to sell LNG that it produces that is in excess of the contract quantities committed under CCL’s third-party SPAs to~~In addition, Cheniere Marketing International LLP (“Cheniere Marketing”), an indirect wholly-owned subsidiary of ~~Cheniere.~~Cheniere, has entered into SPAs with CCL to purchase 15 TBtu per annum of LNG and any LNG produced by CCL in excess of that required for other customers at Cheniere Marketing’s option.

Natural Gas Transportation, Storage and Supply

To ensure CCL is able to transport adequate natural gas feedstock to the Corpus Christi LNG terminal, it has entered into transportation precedent agreements to secure firm pipeline transportation capacity with CCP and certain third-party pipeline companies. CCL has entered into a firm storage services agreement with a third party to assist in managing ~~volatility~~variability in natural gas needs for the Liquefaction Project. CCL has also entered into enabling agreements and long-term natural gas supply contracts with third parties, and will continue to enter into such agreements, in order to secure natural gas feedstock for the Liquefaction Project. As of ~~September~~June 30, ~~2018,~~2019, CCL had secured up to approximately ~~2,640~~2,787 TBtu of natural gas feedstock through long-term natural gas supply contracts, a portion of which is subject to the achievement of certain project milestones and other conditions precedent.

Construction

CCL entered into separate lump sum turnkey contracts with Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) for the engineering, procurement and construction of Stages 1 and 2 of the Liquefaction Project under which Bechtel charges a lump sum for all work performed and generally bears project cost risk unless certain specified events occur, in which case Bechtel may cause CCL to enter into a change order, or CCL agrees with Bechtel to a change order.

The total contract prices of the EPC contract for Stage 1 and the EPC contract for Stage 2, which do not include the Corpus Christi Pipeline, are approximately $7.8 billion and $2.4 billion, respectively, reflecting amounts incurred under change orders through ~~September~~June 30, ~~2018.~~2019. Total expected capital costs for Trains 1 through 3 are estimated to be between $11.0 billion and $12.0 billion before financing costs and between $15.0 billion and $16.0 billion after financing costs including, in each case, estimated owner’s costs and contingencies.

Pipeline Facilities

In December 2014, the FERC issued a certificate of public convenience and necessity under Section 7(c) of the Natural Gas Act of 1938, as amended, authorizing CCP to construct and operate the Corpus Christi Pipeline. The Corpus Christi Pipeline is designed to transport 2.25 Bcf/d of natural gas feedstock required by the Liquefaction Project from the existing regional natural gas pipeline grid. The construction of the Corpus Christi Pipeline ~~commenced in January 2017 and~~ was completed in the second quarter of 2018.

Capital Resources

We expect to finance the construction costs of the Liquefaction Project from one or more of the following: project financing, operating cash flows from CCL and CCP and equity contributions from Cheniere. We realized offsets to LNG terminal costs of $82.5 million in the six months ended June 30, 2019 that were related to the sale of commissioning cargoes because these amounts were earned or loaded prior to the start of commercial operations of Train 1 during the testing phase for its construction. The following table provides a summary of our capital resources from borrowings and available commitments for the Liquefaction Project, excluding any equity contributions, at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 (in thousands):


	September 30,		December 31,		June 30,		December 31,
	2018		2017		2019		2018
Senior notes (1)	$	4,250,000	$	4,250,000	$	4,250,000	$	4,250,000
Credit facilities outstanding balance (2)	4,491,737		2,484,737		6,137,412		5,323,737
Letters of credit issued (2)	315,525		163,578		338,037		315,525
Available commitments under credit facilities (2)	2,530,150		2,273,136		861,963		1,698,150
Total capital resources from borrowings and available commitments(3)	$	11,587,412	$	9,171,451	$	11,587,412	$	11,587,412


(1)	Includes 7.000% Senior Secured Notes due 2024 (the “2024 CCH Senior Notes”), 5.875% Senior Secured Notes due 2025 (the “2025 CCH Senior Notes”) and 5.125% Senior Secured Notes due 2027 (the “2027 CCH Senior Notes”) (collectively, the “CCH Senior Notes”).


(2)	Includes CCH Credit Facility and CCH Working Capital Facility.


(3)	Does not include additional borrowings by our indirect parents which may be used for the Liquefaction Project.

For additional information regarding our debt agreements related to the Liquefaction Project, see Note 6—9—Debt of our Notes to Consolidated Financial Statements in this quarterly report and Note 7—9—Debt of our Notes to the Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, ~~2017.~~2018.

CCH Senior Notes

The CCH Senior Notes are jointly and severally guaranteed by our subsidiaries, CCL, CCP and CCP GP (each a “Guarantor” and collectively, the “Guarantors”).

The indenture governing the CCH Senior Notes (the “CCH Indenture”) contains customary terms and events of default and certain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: incur additional indebtedness or issue preferred stock; make certain investments or pay dividends or distributions on membership interests or subordinated indebtedness or purchase, redeem or retire membership interests; sell or transfer assets, including membership or partnership interests of our restricted subsidiaries; restrict dividends or other payments by restricted subsidiaries to us or any of our restricted subsidiaries; incur liens; enter into transactions with affiliates; dissolve, liquidate, consolidate, merge, sell or lease all or substantially all of the properties or assets of us and our restricted subsidiaries taken as a whole; or permit any Guarantor to dissolve, liquidate, consolidate, merge, sell or lease all or substantially all of its properties and assets.

At any time prior to six months before the respective dates of maturity for each series of the CCH Senior Notes, we may redeem all or part of such series of the CCH Senior Notes at a redemption price equal to the “make-whole” price set forth in the CCH Indenture, plus accrued and unpaid interest, if any, to the date of redemption. We also may at any time within six months of the respective dates of maturity for each series of the CCH Senior Notes, redeem all or part of such series of the CCH Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the CCH Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to the date of redemption.

CCH Credit Facility

In May 2018, we amended and restated the CCH Credit Facility to increase total commitments under the CCH Credit Facility from $4.6 billion to $6.1 billion. Our obligations under the CCH Credit Facility are secured by a first priority lien on substantially all of our assets and the assets of our subsidiaries and by a pledge by CCH HoldCo I of its limited liability company interests in us. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had ~~$1.6 billion~~zero and ~~$2.1~~$1.0 billion of available commitments and ~~$4.5~~$6.1 billion and ~~$2.5~~$5.2 billion of loans outstanding under the CCH Credit Facility, respectively.

date of first commercial delivery for that agreement. Scheduled repayments will be based upon a 19-year tailored amortization, commencing the first full quarter after the completion of Trains 1 through 3 and designed to achieve a minimum projected fixed debt service coverage ratio of 1.50:1.

Under the CCH Credit Facility, we are required to hedge not less than 65% of the variable interest rate exposure of our senior secured debt. We are restricted from making certain distributions under agreements governing our indebtedness generally until, among other requirements, the completion of the construction of Trains 1 ~~and 2~~through 3 of the Liquefaction Project, funding of a debt service reserve account equal to six months of debt service and achieving a historical debt service coverage ratio and fixed projected debt service coverage ratio of at least 1.25:1.00.

CCH Working Capital Facility

In June 2018, we amended and restated the CCH Working Capital Facility to increase total commitments under the CCH Working Capital Facility from $350 million to $1.2 billion. The CCH Working Capital Facility is intended to be used for loans (“CCH Working Capital Loans”), and the issuance of letters of credit ~~as well as for swing line loans (“CCH Swing Line Loans”)~~ for certain working capital requirements related to developing and placing into operations the Liquefaction Project and for related business purposes. Loans under the CCH Working Capital Facility are guaranteed by the Guarantors. We may, from time to time, request increases in the commitments under the CCH Working Capital Facility of up to the maximum allowed for working capital under the Common Terms Agreement that was entered into concurrently with the CCH Credit Facility. As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had ~~$884.5~~$862.0 million and ~~$186.4~~$716.5 million of available commitments, ~~and $315.5~~$338.0 million and ~~$163.6~~$315.5 million aggregate amount of issued letters of credit ~~under the CCH Working Capital Facility, respectively. We did not have any amounts~~and zero and $168.0 million of loans outstanding under the CCH Working Capital Facility, ~~as of both September 30, 2018 and December 31, 2017.~~respectively.

The CCH Working Capital Facility matures on June 29, 2023, and we may prepay the CCH Working Capital ~~Loans, CCH Swing Line~~ Loans and loans made in connection with a draw upon any letter of credit (“CCH LC Loans”) at any time without premium or penalty upon three business days’ notice and may re-borrow at any time. CCH LC Loans have a term of up to one year. CCH Swing Line Loans terminate upon the earliest of (1) the maturity date or earlier termination of the CCH Working Capital Facility, (2) the date that is 15 days after such CCH Swing Line Loan is made and (3) the first borrowing date for a CCH Working Capital Loan or CCH Swing Line Loan occurring at least four business days following the date the CCH Swing Line Loan is made. We are required to reduce the aggregate outstanding principal amount of all CCH Working Capital Loans to zero for a period of five consecutive business days at least once each year.

The CCH Working Capital Facility contains conditions precedent for extensions of credit, as well as customary affirmative and negative covenants. Our obligations under the CCH Working Capital Facility are secured by substantially all of our assets and the assets of the Guarantors as well as all of our membership interests and the membership interest in each of the Guarantors on a pari passu basis with the CCH Senior Notes and the CCH Credit Facility.

CCH Note Purchase Agreement

In June 2019, we entered into the CCH Note Purchase Agreement with Allianz Global Investors GmbH to issue an aggregate principal amount of $727 million of 4.80% Senior Secured Notes due 2039 (the “2039 CCH Senior Notes”), which will be jointly and severally guaranteed by the Guarantors. The conditions to closing and issuance of the 2039 CCH Senior Notes include the receipt of at least two investment grade ratings for the 2039 CCH Senior Notes, in addition to other customary conditions to closing. Pursuant to the CCH Note Purchase Agreement, we have up to 12 months, subject to a six-month extension at our option, to satisfy the conditions to closing and issuance. The net proceeds from the 2039 CCH Senior Notes will be used to repay a portion of our outstanding term loans and pay fees, costs and expenses incurred in connection with the repayment of such outstanding term loans and/or the transactions contemplated in the CCH Note Purchase Agreement.

Equity Contribution Agreement

In May 2018, we amended and restated the existing equity contribution agreement with Cheniere (the “Equity Contribution Agreement”) pursuant to which Cheniere agreed to provide cash contributions up to approximately $1.1 billion, not including $2.0 billion previously contributed under the original equity contribution agreement. As of ~~September~~June 30, ~~2018,~~2019, we have received ~~$2.0 billion~~$71.6 million in contributions under the Equity Contribution Agreement. Cheniere ~~will~~is only be required to make additional contributions under the Equity Contribution Agreement after the commitments under the CCH Credit Facility have been reduced to zero and to the extent cash flows from operations of the Liquefaction Project are unavailable for Liquefaction Project costs. In March 2017,

Cheniere entered into a $750 million senior secured revolving credit facility (the “CEI Revolving Credit Facility”). The proceeds of the CEI Revolving Credit Facility are available to Cheniere to back-stop its obligations under the Equity Contribution Agreement and for general corporate purposes.

Early Works Equity Contribution Agreement

Restrictive Debt Covenants

As of ~~September~~June 30, ~~2018,~~2019, we were in compliance with all covenants related to our debt agreements.

Sources and Uses of Cash

The following table summarizes the sources and uses of our cash, cash equivalents and restricted cash for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands). 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,						Six Months Ended June 30,
	2018			2017			2019			2018
Operating cash flows	$	(31,861	)	$	(51,581	)	$	(52,986	)	$	(14,126	)
Investing cash flows	(2,224,660		)	(1,603,178		)	(841,641		)	(1,198,713		)
Financing cash flows	2,249,912			1,500,732			884,656			1,664,402

Net decrease in cash, cash equivalents and restricted cash	(6,609		)	(154,027		)
Net increase (decrease) in cash, cash equivalents and restricted cash							(9,971		)	451,563
Cash, cash equivalents and restricted cash—beginning of period	226,559			270,540			289,141			226,559
Cash, cash equivalents and restricted cash—end of period	$	219,950		$	116,513		$	279,170		$	678,122

Operating Cash Flows

Operating cash net outflows during the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 ~~and 2017~~ were ~~$31.9~~$53.0 million and ~~$51.6~~$14.1 million, respectively. The ~~decrease~~increase in operating cash net outflows in ~~2018~~2019 compared to ~~2017~~2018 was primarily ~~related~~due to ~~decreased~~increased operating costs and expenses, partially offset by increased cash ~~used for settlement~~receipts from the sale of ~~derivative instruments.~~LNG cargoes, as a result of the commencement of operations of Train 1 of the Liquefaction Project in March 2019.

Investing Cash Flows

Investing cash net outflows during the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 were $841.6 million and ~~2017 were $2.2 billion and $1.6 billion,~~$1,198.7 million, respectively, and were primarily used to fund the construction costs for the Liquefaction Project. These costs are capitalized as construction-in-process until achievement of substantial completion. In addition to cash outflows for construction costs for the Liquefaction Project, we received $3.7 million and $36.3 million during the nine months ended September 30, 2018 and 2017, respectively, from the return of collateral payments previously paid for the Liquefaction Project, which was offset by $10.3 million paid for infrastructure to support the Liquefaction Project in the nine months ended September 30, 2017.

Financing Cash Flows

Financing cash net inflows during the ~~nine~~six months ended ~~September~~June 30, 2019 were $884.7 million, primarily as a result of:

$981.7 million of borrowings under the CCH Credit Facility;

$390.0 million of borrowings and $558.0 million of repayments under the CCH Working Capital Facility; and

$71.6 million of equity contributions from Cheniere.

Financing cash net inflows during the six months ended June 30, 2018 were ~~$2.2~~$1.7 billion, primarily as a result of:

•$~~2.3~~1.7 billion of borrowings and $281.5 million of repayments under the CCH Credit Facility;

•$14.0 million of borrowings ~~and $14.0 million of repayments~~ under the CCH Working Capital Facility;

•


•	$45.4 million of costs related to up-front fees paid for the amendment and restatement of the CCH Credit Facility and the CCH Working Capital Facility;

$~~45.7 million of debt issuance costs related to up-front fees paid upon the closing of these transactions;~~

•~~$9.1~~8.0 million of debt extinguishment ~~costs related to the repayment of the CCH Credit Facility;~~costs; and

•$323.4 million of equity contributions from Cheniere.

~~Financing cash inflows during the nine months ended September 30, 2017 were $1.5 billion, primarily as a result of:~~

•~~$1.2 billion of borrowings under the CCH Credit Facility;~~

~~issuance of aggregate principal amount of $1.5 billion of the 2027 CCH Senior Notes, which was used to prepay $1.4 billion of outstanding borrowings under the CCH Credit Facility;~~

~~$24.0 million of borrowings and $24.0 million of repayments made under the CCH Working Capital Facility;~~

•~~$23.3 million of debt issuance costs related to up-front fees paid upon the closing of these transactions; and~~

•~~$254.1 million of equity contributions from Cheniere.~~

Results of Operations

Our consolidated net ~~income~~loss was ~~$24.4~~$188.9 million in the three months ended ~~September~~June 30, ~~2018,~~2019, compared to a net ~~loss~~income of ~~$8.6~~$7.3 million in the three months ended ~~September~~June 30, ~~2017.~~2018. This ~~$33.0~~$196.2 million ~~increase~~decrease in net income in ~~2018~~2019 was primarily athe result of increased derivative ~~gain,~~loss, net, interest expense, net of capitalized interest, and ~~decreased~~ loss from operations.

Our consolidated net ~~income~~loss was ~~$97.4~~$260.2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to a net ~~loss~~income of ~~$79.1~~$73.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018. This ~~$176.5~~$333.2 million ~~increase~~decrease in net income in ~~2018~~2019 was primarily athe result of increased derivative ~~gain,~~loss, net, ~~decreased loss on modification or extinguishment~~interest expense, net of ~~debt~~capitalized interest, and ~~decreased~~ loss from operations.

~~Income (loss) from~~We enter into derivative instruments to manage our exposure to changing interest rates and commodity-related marketing and price risk. Derivative instruments are reported at fair value on our Consolidated Financial Statements. In some cases, the underlying transactions economically hedged receive accrual accounting treatment, whereby revenues and expenses are recognized only upon delivery, receipt or realization of the underlying transaction. Because the recognition of derivative instruments at fair value has the effect of recognizing gains or losses relating to future period exposure, use of derivative instruments may increase the volatility of our results of operations based on changes in market pricing, counterparty credit risk and other relevant factors.

Revenues

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2018 2017 Change 2018 2017 Change
Revenues $ —
$ —
$ ��
$ —
$ —
$ —

Operating and maintenance expense (recovery) (9,477 ) 533
(10,010 ) (6,377 ) 2,097
(8,474 )
Operating and maintenance expense—affiliate 1,522
1,504
18
2,539
1,653
886
Development expense 49
82
(33 ) 172
497
(325 )
Development expense—affiliate —
—
—
—
8
(8 )
General and administrative expense 1,479
861
618
3,514
3,824
(310 )
General and administrative expense—affiliate 607
289
318
1,605
753
852
Depreciation and amortization expense 3,488
248
3,240
5,246
537
4,709
Impairment expense and loss (gain) on disposal of assets (13 ) 2,059
(2,072 ) (13 ) 2,064
(2,077 )
Total expenses (recoveries) (2,345 )
5,576

(7,921 ) 6,686

11,433

(4,747 )

Income (loss) from operations $ 2,345
$ (5,576 ) $ 7,921
$ (6,686 ) $ (11,433 ) $ 4,747



	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except volumes)	2019		2018		Change		2019		2018		Change
LNG revenues	$	118,525	$	—	$	118,525	$	131,581	$	—	$	131,581
LNG revenues—affiliate	181,548		—		181,548		274,573		—		274,573
Total revenues	$	300,073	$	—	$	300,073	$	406,154	$	—	$	406,154

LNG volumes recognized as revenues (in TBtu)	56		—		56		77		—		77

During the three and six months ended June 30, 2019, we began recognizing LNG revenues from the Liquefaction Project following the substantial completion and the commencement of operating activities of Train 1 of the Liquefaction Project in February 2019. We expect our LNG revenues to increase in the future upon Trains 2 and 3 of the Liquefaction Project becoming operational. Also included in LNG revenues are gains and losses from derivative instruments, which include the realized value associated with a portion of derivative instruments that settle through physical delivery and the sale of natural gas procured for the liquefaction process.

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 the construction of that Train. During the three months ended June 30, 2019, we realized offsets to LNG terminal costs of $8.3 million corresponding to 3 TBtu of LNG that were related to the sale of commissioning cargoes. During the six months ended June 30, 2019, we realized offsets to LNG terminal costs of $82.5 million corresponding to 18 TBtu of LNG that were related to the sale of commissioning cargoes. We did not realize any offsets to LNG terminal costs in the three and six months ended June 30, 2018.

Operating costs and expenses



	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2019		2018		Change		2019		2018		Change
Cost of sales	$	181,136	$	1,031	$	180,105	$	238,665	$	1,147	$	237,518
Cost of sales—related party	24,230		—		24,230		35,753		—		35,753
Operating and maintenance expense	60,817		1,103		59,714		92,672		1,953		90,719
Operating and maintenance expense—affiliate	15,459		551		14,908		20,706		1,017		19,689
Development expense	532		89		443		532		123		409
Development expense—affiliate	38		—		38		38		—		38
General and administrative expense	1,542		1,185		357		3,079		2,035		1,044
General and administrative expense—affiliate	2,407		595		1,812		3,562		998		2,564
Depreciation and amortization expense	57,300		1,387		55,913		79,624		1,758		77,866
Impairment expense and loss on disposal of assets	—		—		—		313		—		313
Total operating costs and expenses	$	343,461	$	5,941	$	337,520	$	474,944	$	9,031	$	465,913

Our ~~loss from operations decreased $7.9 million~~total operating costs and ~~$4.7 million~~expenses increased during the three and ~~nine~~six months ended ~~September~~June 30, 2019 from the three and six months ended June 30, 2018, ~~respectively,~~primarily as a result of the commencement of operations of Train 1 of the Liquefaction Project in February 2019.

Cost of sales increased during the three and six months ended June 30, 2019 from the ~~comparable periods~~three and six months ended June 30, 2018, primarily related to the increase in ~~2017 primarily~~the volume of natural gas feedstock related to our LNG sales due to the ~~decrease~~commencement of operations at the Liquefaction Project. Cost of sales includes costs incurred directly for the production and delivery of LNG from the Liquefaction Project, to the extent those costs are not utilized for the commissioning process. Cost of sales also includes gains and losses from derivatives associated with economic hedges to secure natural gas feedstock for the Liquefaction Project and costs associated with a portion of derivative instruments that settle through physical delivery and the sale of natural gas procured for the liquefaction process.

Operating and maintenance expense primarily includes costs associated with operating and maintaining the Liquefaction Project. The increase in operating and maintenance expense ~~which resulted~~(including affiliates) during the three and six months ended June 30, 2019 from ~~an increase in fair value of our~~the three and six months ended June 30, 2018 was primarily related to increased natural gas ~~supply agreements due to favorable market shifts between the periods. This decrease in operating~~transportation and storage capacity demand charges, increased third-party service and maintenance ~~expense was partially offset by~~contract costs and increased ~~depreciation~~payroll and benefit costs of operations personnel, generally as a result of the commencement of operations at the Liquefaction Project. Operating and maintenance (including affiliates) also includes insurance and regulatory costs and other operating costs.

Depreciation and amortization ~~expenses,~~expense increased during the three and six months ended June 30, 2019 from the three and six months ended June 30, 2018 as a result of commencing operations of Train 1 of the ~~assets related to~~Liquefaction Project in February 2019 and completing construction of the Corpus Christi Pipeline in the second quarter of 2018, as the related assets began depreciating upon ~~completion of the construction.~~reaching substantial completion.

Other expense (income)


	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	2018			2017		Change			2018			2017		Change			2019			2018			Change			2019			2018			Change
Interest expense, net of capitalized interest																	$	73,052		$	—		$	73,052		$	84,810		$	—		$	84,810
Loss on modification or extinguishment of debt	$	—		$	—	$	—		$	15,332		$	32,480	$	(17,148	)	—			15,332			(15,332		)	—			15,332			(15,332		)
Derivative loss (gain), net	(21,818		)	2,906		(24,724		)	(119,233		)	35,002		(154,235		)	73,821			(28,566		)	102,387			108,908			(97,415		)	206,323
Other expense (income)	(225		)	95		(320		)	(184		)	177		(361		)	(1,354		)	(26		)	(1,328		)	(2,324		)	41			(2,365		)
Total other expense (income)	$	(22,043	)	$	3,001	$	(25,044	)	$	(104,085	)	$	67,659	$	(171,744	)	$	145,519		$	(13,260	)	$	158,779		$	191,394		$	(82,042	)	$	273,436

Interest expense, net of capitalized interest, increased during the three and six months ended June 30, 2019 compared to the three and six months ended June 30, 2018, primarily as a result of a decrease in the portion of total interest costs that could be capitalized due to the commencement of operations at the Liquefaction Project. For the three months ended June 30, 2019 and 2018, we incurred $138.0 million and $106.6 million of total interest cost, respectively, of which we capitalized $64.9 million and $106.6 million, respectively, primarily for the construction of the Liquefaction Project. For the six months ended June 30, 2019

and 2018, we incurred $270.6 million and $207.8 million of total interest cost, respectively, of which we capitalized $185.8 million and $207.8 million, respectively, primarily for the construction of the Liquefaction Project.

Loss on modification or extinguishment of debt decreased during the ~~nine~~three and six months ended ~~September~~June 30, ~~2018,~~2019, as compared to the ~~nine~~three and six months ended ~~September~~June 30, ~~2017.~~2018. Loss on modification or extinguishment of debt recognized in 2018 was attributable to $15.3 million of debt modification and extinguishment costs ~~relating~~related to the incurrence of ~~third party~~third-party fees and ~~write off~~write-off of unamortized debt issuance costs as a result of the amendment and restatement of the CCH Credit Facility. Loss on modification or extinguishment of debt recognized in 2017 was attributable to the write-off of debt issuance costs of $32.5 million in May 2017 upon the prepayment of approximately $1.4 billion of outstanding borrowings under the CCH Credit Facility in connection with the issuance of the 2027 CCH Senior Notes.

Derivative ~~gain,~~loss, net increased ~~from a net loss~~ during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~a net gain during~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2018. The increase in derivative gain, net in~~ 2018, ~~as compared to derivative~~

~~loss, net in 2017 was~~ primarily due to ~~a favorable~~an unfavorable shift in the long-term forward LIBOR curve between the periods. ~~During~~

Other income increased during the ~~nine~~three and six months ended ~~September~~June 30, 2019 as compared to the three and six months ended June 30, 2018, ~~we also recognized a $4.8 million gain~~primarily due to an increase in ~~June 2018 upon the termination of~~ interest ~~rate swaps associated with the amendment~~income earned on our cash and restatement of the CCH Credit Facility. During the nine months ended September 30, 2017, we recognized a $13.0 million loss in May 2017 in conjunction with the termination of approximately $1.4 billion of commitments under the CCH Credit Facility.cash equivalents.

Off-Balance Sheet Arrangements

As of ~~September~~June 30, ~~2018,~~2019, we had no transactions that met the definition of off-balance sheet arrangements that may have a current or future material effect on our consolidated financial position or operating results.

Summary of Critical Accounting Estimates

The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated 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 year ended December 31, ~~2017~~2018.

Recent Accounting Standards

For descriptions of recently issued accounting standards, see Note ~~10—Recent Accounting Standards~~1—Nature of Operations and Basis of Presentation of our Notes to Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Marketing and Trading Commodity Price Risk

We have entered into commodity derivatives consisting of natural gas supply contracts for the commissioning and operation of the Liquefaction Project (“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 thousands):

September 30, 2018 December 31, 2017
Fair Value Change in Fair Value Fair Value Change in Fair Value
Liquefaction Supply Derivatives $ 9,265
$ 4,496
$ (91 ) $ 10



	June 30, 2019				December 31, 2018
	Fair Value		Change in Fair Value		Fair Value			Change in Fair Value
Liquefaction Supply Derivatives	$	7,858	$	4,265	$	(68	)	$	1,165

Interest Rate Risk

We are exposed to interest rate risk primarily when we incur debt related to project financing. Interest rate risk is managed in part by replacing outstanding floating-rate debt with fixed-rate debt with varying maturities. We have entered into interest rate swaps to hedge the exposure to volatility in a portion of the floating-rate interest payments under the CCH Credit Facility (“Interest Rate Derivatives”) and to hedge against changes in interest rates that could impact our anticipated future issuance of debt (“Interest Rate Forward Start Derivatives” and, collectively with the Interest Rate Derivatives, CCH Interest Rate Derivatives”). In order to test the sensitivity of the fair value of the Interest Rate Derivatives to changes in interest rates, management modeled a 10% change in the forward ~~1-month~~one-month LIBOR curve across the remaining terms of the CCH Interest Rate Derivatives as follows (in thousands):

September 30, 2018 December 31, 2017
Fair Value Change in Fair Value Fair Value Change in Fair Value
Interest Rate Derivatives $ 94,180
$ 42,254
$ (32,258 ) $ 43,994



	June 30, 2019					December 31, 2018
	Fair Value			Change in Fair Value		Fair Value		Change in Fair Value
Interest Rate Derivatives	$	(88,187	)	$	24,536	$	18,069	$	37,145
Interest Rate Forward Start Derivatives	(6,640		)	19,772		—		—

See Note 4—6—Derivative Instruments 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 voluntarily filed by us under 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 President and 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 President and 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.

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 year ended December 31, ~~2017~~2018.


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 year ended December 31, ~~2017~~2018.


ITEM 6.	EXHIBITS



Exhibit No.		Description
10.1*		Change orders to the Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 1 Liquefaction Facility, dated as of December 6, 2013, between CCL and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order CO-00051 Fencing Scope Modifications, dated April 19, 2019 and (ii) Change Order CO-00052 West Jetty Manual Gas Sampler, dated April 19, 2019 (Portions of this exhibit have been omitted.)
10.2*		Change orders to the Amended and Restated Fixed Price Separated Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Stage 2 Liquefaction Facility, dated as of December 12, 2017, between CCL and Bechtel Oil, Gas and Chemicals, Inc.: (i) the Change Order ~~CO-00001 Stage 2 EPC Agreement Revised Table A-2,~~CO-000013 Section 232 Steel and Aluminum Tariffs & Anti-dumping (ADA) and Countervailing Duties (CVD), dated May ~~18, 2018,~~2, 2019, (ii) the Change Order ~~CO-00002 Stage 2 EPC Agreement Amended and Restated Attachment C,~~CO-00014 Tank B Jump-over Tie-In Interface - Long Lead Items, dated May ~~18, 2018,~~2, 2019 and (iii) the Change Order ~~CO-00003 Fuel Provisional Sum Adjustment,~~CO-00015 Section 232 Steel and Aluminum Tariffs & Anti-dumping (ADA) and Countervailing (CVD) Q1_2019, dated May 24, 2018, (iv) the Change Order CO-00004 Currency Provisional Sum Adjustment, dated May 29, 2018, (v) the Change Order CO-00005 JT Valve Modifications, dated July 10, 2018 and (vi) the Change Order CO-00006 Tank B Soil Conditions, International Building Code, and East Jetty Marine Facility Schedule Acceleration, dated September 5, 2018June 4, 2019 (Portions of this exhibit have been ~~omitted and filed separately with the SEC pursuant to a request for confidential treatment.~~omitted.)
31.1*		Certification by President and Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
32.1**		Certification by President and 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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document



*	Filed herewith.
**	Furnished herewith.

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.



		CHENIERE CORPUS CHRISTI HOLDINGS, LLC

Date:	~~November~~August 7, ~~2018~~2019	By:	/s/ Michael J. Wortley
			Michael J. Wortley
			President and Chief Financial Officer
			(on behalf of the registrant and as principal financial officer)

Date:	~~November~~August 7, ~~2018~~2019	By:	/s/ Leonard E. Travis
			Leonard E. Travis
			Chief Accounting Officer
			(on behalf of the registrant and as principal accounting officer)

4140



	Definitions	1
Part I. Financial Information
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated ~~Statement~~Statements of Member’s Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2928

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37

Item 4.	Controls and Procedures	3738

Part II. Other Information
Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 6.	Exhibits	4039

	Signatures	4140



Condensed Consolidating Statement of Operations
Three Months Ended September 30, 2018
(in thousands)

	Parent Issuer			Guarantors			Eliminations			Consolidated

Revenues	$	—		$	—		$	—		$	—

Expenses
Operating and maintenance expense (recovery)	—			(9,477		)	—			(9,477		)
Operating and maintenance expense—affiliate	—			1,522			—			1,522
Development expense	—			49			—			49
General and administrative expense	450			1,029			—			1,479
General and administrative expense—affiliate	—			607			—			607
Depreciation and amortization expense	89			3,399			—			3,488
Impairment expense and gain on disposal of assets	—			(13		)	—			(13		)
Total expenses (recoveries)	539			(2,884		)	—			(2,345		)

Income (loss) from operations	(539		)	2,884			—			2,345

Other income (expense)
Derivative gain, net	21,818			—			—			21,818
Other income	220			80			(75		)	225
Total other income	22,038			80			(75		)	22,043

Net income	$	21,499		$	2,964		$	(75	)	$	24,388

~~Standard~~

~~Description~~

~~Expected Date of Adoption~~

~~Effect on our Consolidated Financial Statements or Other Significant Matters~~

~~ASU 2016-02,~~ ~~Leases (Topic 842), and subsequent amendments thereto~~

This standard requires a lessee to recognize leases on its balance sheet by recording a lease liability representing the obligation to make future lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. A lessee is permitted to make an election not to recognize lease assets and liabilities for leases with a term of 12 months or less. The standard also modifies the definition of a lease and requires expanded disclosures. This guidance may be early adopted, and may be adopted using either a modified retrospective approach to apply the standard at the beginning of the earliest period presented in the financial statements or an optional transition approach to apply the standard at the date of adoption with no retrospective adjustments to prior periods. Certain additional practical expedients are also available.

~~January 1, 2019~~

We continue to evaluate the effect of this standard on our Consolidated Financial Statements. This evaluation process includes reviewing all forms of leases, performing a completeness assessment over the lease population, analyzing the practical expedients and assessing opportunities to make certain changes to our lease accounting information technology system in order to determine the best implementation strategy. Preliminarily, we expect that the requirement to recognize all leases on our Consolidated Balance Sheets will be a significant change from current practice but will not have a material impact on our Consolidated Balance Sheets. Because this assessment is preliminary and the accounting for leases is subject to significant judgment, this conclusion could change as we finalize our assessment. We have not yet determined the impact of the adoption of this standard upon our results of operations or cash flows. We anticipate electing the optional transition method to initially apply the standard at the January 1, 2019 adoption date. We expect to elect the package of practical expedients permitted under the transition guidance which, among other things, allows the carryforward of prior conclusions related to lease identification and classification. We also expect to elect the practical expedient to retain our existing accounting for land easements which were not previously accounted for as leases. We have not yet determined whether we will elect any other practical expedients upon transition.