Cheniere Corpus Christi 10-Q 2023 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2023

or

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

 For the transition period from            to            

Commission file number 333-215435

Cheniere Corpus Christi Holdings, LLC 

(Exact name of registrant as specified in its charter)

Delaware	47-1929160
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

700 Milam Street, Suite 1900

Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

(713) 375-5000

(Registrant’s telephone number, including area code)

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

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

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

Note: The registrant is a voluntary filer not subject to the filing requirements of Section 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 such files).    Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

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

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

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

CHENIERE CORPUS CHRISTI HOLDINGS, LLC

TABLE OF CONTENTS

	Definitions	1
Part I. Financial Information
Item 1.	Consolidated Financial Statements	3
	Consolidated Statements of Operations	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Member’s Equity (Deficit)	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
	Note 1—Nature of Operations and Basis of Presentation	7
	Note 2—CCL Stage III Contribution and Merger	7
	Note 3—Restricted Cash and Cash Equivalents	8
	Note 4—Trade and Other Receivables, Net of Current Expected Credit Losses	8
	Note 5—Inventory	8
	Note 6—Property, Plant and Equipment, Net of Accumulated Depreciation	8
	Note 7—Derivative Instruments	9
	Note 8—Accrued Liabilities	12
	Note 9—Debt	12
	Note 10—Revenues	14
	Note 11—Related Party Transactions	16
	Note 12—Customer Concentration	16
	Note 13—Supplemental Cash Flow Information	17
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4.	Controls and Procedures	26
Part II. Other Information
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 6.	Exhibits	27
	Signatures	28

i

DEFINITIONS

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

Common Industry and Other Terms

ASU	Accounting Standards Update
Bcf	billion cubic feet
Bcf/d	billion cubic feet per day
Bcf/yr	billion cubic feet per year
Bcfe	billion cubic feet equivalent
DAT	delivered at terminal
DOE	U.S. Department of Energy
EPC	engineering, procurement and construction
ESG	environmental, social and governance
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FID	final investment decision
FOB	free-on-board
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
IPM agreements	integrated production marketing agreements in which the gas producer sells to us gas on a global LNG index price, less a fixed liquefaction fee, shipping and other costs
LIBOR	London Interbank Offered Rate
LNG	liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
MMBtu	million British thermal units; one British thermal unit measures the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit
mtpa	million tonnes per annum
non-FTA countries	countries with which the United States does not have a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted
SEC	U.S. Securities and Exchange Commission
SOFR	Secured Overnight Financing Rate
SPA	LNG sale and purchase agreement
TBtu	trillion British thermal units; one British thermal unit measures the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit
Train	an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG

1

Abbreviated Legal Entity Structure

The following diagram depicts our abbreviated legal entity structure as of September 30, 2023, 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.

In June 2022, as part of the internal restructuring of Cheniere’s subsidiaries, Cheniere contributed its equity interest in Corpus Christi Liquefaction Stage III, LLC (“CCL Stage III”), formerly a wholly owned direct subsidiary of Cheniere, to us, and CCL Stage III was subsequently merged with and into CCL, the surviving entity of the merger and our wholly owned subsidiary.

2

PART I.    FINANCIAL INFORMATION

ITEM 1.     CONSOLIDATED FINANCIAL STATEMENTS

CHENIERE CORPUS CHRISTI HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues
LNG revenues	$	874	$	1,737	$	2,788	$	4,668
LNG revenues—affiliate	385		1,126		1,222		2,560
Total revenues	1,259		2,863		4,010		7,228
Operating costs and expenses (recoveries)
Cost (recovery) of sales (excluding items shown separately below)	(443)		5,929		(3,114)		10,712
Cost of sales—affiliate	41		47		134		95
Operating and maintenance expense	125		119		359		350
Operating and maintenance expense—affiliate	27		28		84		86
Operating and maintenance expense—related party	3		2		7		7
General and administrative expense	2		2		4		6
General and administrative expense—affiliate	11		11		34		27
Depreciation and amortization expense	112		112		336		334
Other	2		1		2		5
Total operating costs and expenses (recoveries)	(120)		6,251		(2,154)		11,622
Income (loss) from operations	1,379		(3,388)		6,164		(4,394)
Other income (expense)
Interest expense, net of capitalized interest	(52)		(106)		(172)		(340)
Loss on modification or extinguishment of debt	—		(6)		(10)		(36)
Other income, net	2		2		7		5
Total other expense	(50)		(110)		(175)		(371)
Net income (loss)	$	1,329	$	(3,498)	$	5,989	$	(4,765)

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

3

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions)

	September 30,		December 31,
	2023		2022
ASSETS	(unaudited)
Current assets
Restricted cash and cash equivalents	$	130	$	738
Trade and other receivables, net of current expected credit losses	160		348
Trade receivables—affiliate	184		240
Advances to affiliate	121		132
Inventory	116		178
Current derivative assets	28		12
Margin deposits	1		76
Other current assets, net	23		18
Total current assets	763		1,742
Property, plant and equipment, net of accumulated depreciation	14,567		13,673
Debt issuance costs, net of accumulated amortization	35		40
Derivative assets	509		7
Other non-current assets, net	262		225
Total assets	$	16,136	$	15,687
LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable	$	68	$	85
Accrued liabilities	504		901
Accrued liabilities—related party	1		1
Current debt, net of discount and debt issuance costs	—		495
Due to affiliates	35		43
Current derivative liabilities	649		1,374
Other current liabilities	3		1
Total current liabilities	1,260		2,900
Long-term debt, net of discount and debt issuance costs	6,309		6,698
Derivative liabilities	1,151		4,923
Other non-current liabilities	77		78
Other non-current liabilities—affiliate	3		4
Member’s equity	7,336		1,084
Total liabilities and member’s equity	$	16,136	$	15,687

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

4

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEMBER’S EQUITY (DEFICIT)

(in millions)

(unaudited)

Three and Nine Months Ended September 30, 2023
	Cheniere CCH HoldCo I, LLC		Total Member’s Equity
Balance at December 31, 2022	$	1,084	$	1,084
Contributions (excluding items shown separately below)	45		45
Contributions of cancelled senior secured notes (see Note 9)	396		396
Distributions	(60)		(60)
Net income	3,829		3,829
Balance at March 31, 2023	5,294		5,294
Contributions of cancelled senior secured notes (see Note 9)	2		2
Net income	831		831
Balance at June 30, 2023	6,127		6,127
Contributions	60		60
Distributions	(180)		(180)
Net income	1,329		1,329
Balance at September 30, 2023	$	7,336	$	7,336

Three and Nine Months Ended September 30, 2022
	Cheniere CCH HoldCo I, LLC		Total Member’s Equity (Deficit)
Balance at December 31, 2021	$	1,281	$	1,281
Contributions	138		138
Net loss	(740)		(740)
Balance at March 31, 2022	679		679
Contributions	801		801
Contributions of CCL Stage III entity (see Note 2)	(1,482)		(1,482)
Net loss	(527)		(527)
Balance at June 30, 2022	(529)		(529)
Contributions	681		681
Net loss	(3,498)		(3,498)
Balance at September 30, 2022	$	(3,346)	$	(3,346)

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

5

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities
Net income (loss)	$	5,989	$	(4,765)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	336		334
Amortization of discount and debt issuance costs	8		15
Loss on modification or extinguishment of debt	10		36
Total losses (gains) on derivative instruments, net	(5,028)		5,754
Net cash provided by (used for) settlement of derivative instruments	13		(106)
Other	3		4
Changes in operating assets and liabilities:
Trade and other receivables	188		(120)
Trade receivables—affiliate	56		(284)
Advances to affiliate	16		(25)
Inventory	58		16
Margin deposits	74		(80)
Accounts payable and accrued liabilities	(451)		462
Due to affiliates	(8)		(1)
Deferred revenue	—		32
Other, net	(35)		(38)
Other, net—affiliate	(1)		—
Net cash provided by operating activities	1,228		1,234
Cash flows from investing activities
Property, plant and equipment, net	(1,184)		(618)
Other	(11)		—
Net cash used in investing activities	(1,195)		(618)
Cash flows from financing activities
Proceeds from issuances of debt	—		440
Repayments of debt	(498)		(2,419)
Debt issuance costs	—		(44)
Debt extinguishment costs	(8)		(18)
Contributions	105		1,583
Distributions	(240)		—
Net cash used in financing activities	(641)		(458)
Net increase (decrease) in restricted cash and cash equivalents	(608)		158
Restricted cash and cash equivalents—beginning of period	738		44
Restricted cash and cash equivalents—end of period	$	130	$	202

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

6

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—NATURE OF OPERATIONS AND BASIS OF PRESENTATION

We operate a natural gas liquefaction and export facility located near Corpus Christi, Texas (the “Corpus Christi LNG Terminal”) through CCL, which has three operational Trains for a total production capacity of approximately 15 mtpa of LNG, three LNG storage tanks and two marine berths. Additionally, we are constructing an expansion of the Corpus Christi LNG Terminal (the “Corpus Christi Stage 3 Project”) for seven midscale Trains with an expected total production capacity of over 10 mtpa of LNG.

Through our subsidiary CCP, we also own a 21.5-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 Corpus Christi LNG Terminal and the Corpus Christi Stage 3 Project, the “Liquefaction Project”).

We have increased available liquefaction capacity at our Liquefaction Project as a result of debottlenecking and other optimization projects. We hold a significant land position at the Corpus Christi LNG Terminal which provides opportunity for further liquefaction capacity expansion. In March 2023, CCL and another subsidiary of Cheniere submitted an application with the FERC under the Natural Gas Act for an expansion adjacent to the Liquefaction Project consisting of two midscale Trains with an expected total production capacity of approximately 3 mtpa of LNG. The development of this site or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before we make a positive FID.

We do not have employees and thus we have various services agreements with affiliates of Cheniere in the ordinary course of business, including services required to construct, operate and maintain the Liquefaction Project, and administrative services. See Note 11—Related Party Transactions for additional details of the activity under these services agreements during the three and nine months ended September 30, 2023 and 2022.

Basis of Presentation

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

Results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2023.

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. Accordingly, no provision or liability for federal or state income taxes is included in the accompanying Consolidated Financial Statements.

NOTE 2—CCL STAGE III CONTRIBUTION AND MERGER

In June 2022, Cheniere’s board of directors made a positive FID with respect to the investment in the construction and operation of the Corpus Christi Stage 3 Project and issued a full notice to proceed with construction to Bechtel Energy Inc. (“Bechtel”) effective June 16, 2022. In connection with the positive FID, CCL Stage III, through which Cheniere was developing and constructing the Corpus Christi Stage 3 Project, was contributed to us from Cheniere (the “Contribution”) on June 15, 2022. Immediately following the Contribution, CCL Stage III was merged with and into CCL (the “Merger”), the surviving entity of the merger and our wholly owned subsidiary.

The Contribution was accounted for as a common control transaction as the assets and liabilities were transferred between entities under Cheniere’s control. As a result, the net liability transferred to us was recognized as a contribution in our Consolidated Statements of Member’s Equity (Deficit) and at the historical basis of Cheniere on June 15, 2022 in our Consolidated Balance Sheets. The Contribution was presented prospectively as we have concluded that the Contribution did

7

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

not represent a change in our reporting entity, primarily as we concluded that CCL Stage III did not constitute a business under FASB topic Accounting Standards Codification 805, Business Combinations. The Merger had no impact on our Consolidated Financial Statements as it occurred between our consolidated subsidiaries.

NOTE 3—RESTRICTED CASH AND CASH EQUIVALENTS

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. 

As of September 30, 2023 and December 31, 2022, we had $130 million and $738 million of restricted cash and cash equivalents, respectively, for which the usage or withdrawal of such cash is restricted to the payment of liabilities related to the Liquefaction Project as required under certain debt arrangements, and additionally, as of December 31, 2022, the balance included $498 million related to the cash contributed from Cheniere for the redemption of the remaining outstanding principal balance of the 7.000% Senior Notes due 2024 (the “2024 CCH Senior Notes”) in January 2023.

NOTE 4—TRADE AND OTHER RECEIVABLES, NET OF CURRENT EXPECTED CREDIT LOSSES

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

	September 30,		December 31,
	2023		2022
Trade receivables	$	143	$	319
Other receivables	17		29
Total trade and other receivables, net of current expected credit losses	$	160	$	348

NOTE 5—INVENTORY

Inventory consisted of the following (in millions):

	September 30,		December 31,
	2023		2022
Materials	$	95	$	92
LNG	10		53
Natural gas	10		31
Other	1		2
Total inventory	$	116	$	178

NOTE 6—PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

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

	September 30,		December 31,
	2023		2022
LNG terminal
Terminal and interconnecting pipeline facilities	$	13,313	$	13,299
Site and related costs	302		302
Construction-in-process	2,699		1,486
Accumulated depreciation	(1,754)		(1,421)
Total LNG terminal, net of accumulated depreciation	14,560		13,666
Fixed assets
Fixed assets	29		26
Accumulated depreciation	(22)		(19)
Total fixed assets, net of accumulated depreciation	7		7
Property, plant and equipment, net of accumulated depreciation	$	14,567	$	13,673

Depreciation expense was $112 million and $111 million during the three months ended September 30, 2023 and 2022 and $335 million and $332 million during the nine months ended September 30, 2023 and 2022, respectively.

8

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 7—DERIVATIVE INSTRUMENTS

CCL has entered into commodity derivatives consisting of natural gas and power supply contracts, including those under the IPM agreements, for the development, commissioning and operation of the Liquefaction Project and associated economic hedges (collectively, the “Liquefaction Supply Derivatives”).

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

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

	Fair Value Measurements as of
	September 30, 2023								December 31, 2022
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liquefaction Supply Derivatives asset (liability)	$	6	$	55	$	(1,324)	$	(1,263)	$	(54)	$	(19)	$	(6,205)	$	(6,278)

We value the Liquefaction Supply Derivatives using a market or option-based approach incorporating present value techniques, as needed, which incorporates observable commodity price curves, when available, and other relevant data.

The fair value of the Liquefaction Supply Derivatives is predominantly driven by observable and unobservable market commodity prices and, as applicable to our natural gas supply contracts, our assessment of the associated events deriving fair value, including, but not limited to, evaluation of whether the respective market exists from the perspective of market participants as infrastructure is developed.

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

9

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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

	Net Fair Value Liability (in millions)	Valuation Approach	Significant Unobservable Input	Range of Significant Unobservable Inputs / Weighted Average (1)
Liquefaction Supply Derivatives	$(1,324)	Market approach incorporating present value techniques	Henry Hub basis spread	$(1.245) - $0.638 / $(0.112)
		Option pricing model	International LNG pricing spread, relative to Henry Hub (2)	83% - 422% / 183%

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

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

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

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Balance, beginning of period	$	(2,356)	$	(5,006)	$	(6,205)	$	(1,221)
Realized and change in fair value gains (losses) included in net income (loss) (1):
Included in cost of sales, existing deals (2)	903		(4,123)		4,075		(2,727)
Included in cost of sales, new deals (3)	—		—		3		—
Purchases and settlements:
Purchases (4)	—		1		—		(5,290)
Settlements (5)	128		346		801		457
Transfers out of level 3 (6)	1		1		2		—
Balance, end of period	$	(1,324)	$	(8,781)	$	(1,324)	$	(8,781)
Favorable (unfavorable) changes in fair value relating to instruments still held at the end of the period	$	903	$	(4,123)	$	4,078	$	(2,727)

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

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

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

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

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

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

All counterparty derivative contracts provide for the unconditional right of set-off in the event of default. We have elected to report derivative assets and liabilities arising from those derivative contracts with the same counterparty and the unconditional contractual right of set-off on a net basis. The use of derivative instruments exposes CCL to counterparty credit

10

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

risk, or the risk that a counterparty will be unable to meet its commitments, in instances when the derivative instruments are in an asset position. Additionally, counterparties are at risk that CCL will be unable to meet its commitments in instances where the derivative instruments are in a liability position. We incorporate both CCL’s nonperformance risk and the respective counterparty’s nonperformance risk in fair value measurements depending on the position of the derivative. In adjusting the fair value of the derivative contracts for the effect of nonperformance risk, we have considered the impact of any applicable credit enhancements, such as collateral postings, set-off rights and guarantees.

Liquefaction Supply Derivatives

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

The forward notional amount for the Liquefaction Supply Derivatives was approximately 7,900 TBtu and 8,532 TBtu as of September 30, 2023 and December 31, 2022, respectively.

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

	Gain (Loss) Recognized in Consolidated Statements of Operations
Consolidated Statements of Operations Location (1)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
LNG revenues	$	2	$	—	$	(5)	$	7
Recovery (cost) of sales	1,038		(3,883)		5,033		(5,763)

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

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

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

	Fair Value Measurements as of (1)
	September 30, 2023		December 31, 2022
Consolidated Balance Sheets Location
Current derivative assets	$	28	$	12
Derivative assets	509		7
Total derivative assets	537		19
Current derivative liabilities	(649)		(1,374)
Derivative liabilities	(1,151)		(4,923)
Total derivative liabilities	(1,800)		(6,297)
Derivative liability, net	$	(1,263)	$	(6,278)

(1)Does not include collateral posted with counterparties by CCL of $1 million and $76 million as of September 30, 2023 and December 31, 2022, respectively, which are included in margin deposits on our Consolidated Balance Sheets.

11

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Consolidated Balance Sheets Presentation

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

	Liquefaction Supply Derivatives
	September 30, 2023		December 31, 2022
Gross assets	$	989	$	19
Offsetting amounts	(452)		—
Net assets	$	537	$	19
Gross liabilities	$	(1,882)	$	(6,622)
Offsetting amounts	82		325
Net liabilities	$	(1,800)	$	(6,297)

NOTE 8—ACCRUED LIABILITIES

Accrued liabilities consisted of the following (in millions): 

	September 30,		December 31,
	2023		2022
Natural gas purchases	$	229	$	597
Interest costs and related debt fees	77		150
Liquefaction Project costs	157		103
Other accrued liabilities	41		51
Total accrued liabilities	$	504	$	901

NOTE 9—DEBT

Debt consisted of the following (in millions): 

	September 30,		December 31,
	2023		2022
Senior Secured Notes:
2024 CCH Senior Notes	$	—	$	498
5.875% due 2025	1,491		1,491
5.125% due 2027	1,201		1,271
3.700% due 2029	1,125		1,361
3.788% weighted average rate due 2039	2,539		2,633
Total Senior Secured Notes	6,356		7,254
Term loan facility agreement (the “CCH Credit Facility”)	—		—
Working capital facility agreement (the “CCH Working Capital Facility”) (1)	—		—
Total debt	6,356		7,254
Current debt, net of discount and debt issuance costs	—		(495)
Long-term portion of unamortized discount and debt issuance costs, net	(47)		(61)
Total long-term debt, net of discount and debt issuance costs	$	6,309	$	6,698

(1)The CCH Working Capital Facility is classified as short-term debt as we are required to reduce the aggregate outstanding principal amount to zero for a period of five consecutive business days at least once each year.

12

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Credit Facilities

Below is a summary of our credit facilities outstanding as of September 30, 2023 (in millions):

	CCH Credit Facility		CCH Working Capital Facility
Total facility size	$	3,260	$	1,500
Less:
Outstanding balance	—		—
Letters of credit issued	—		155
Available commitment	$	3,260	$	1,345
Priority ranking	Senior secured		Senior secured
Interest rate on available balance (1)	SOFR plus credit spread adjustment of 0.1%, plus margin of 1.5% or base rate plus 0.5%		SOFR plus credit spread adjustment of 0.1%, plus margin of 1.0% - 1.5% or base rate plus 0.0% - 0.5%
Commitment fees on undrawn balance (1)	0.525%		0.10% - 0.20%
Maturity date	(2)		June 15, 2027

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

(2)The CCH Credit Facility matures the earlier of June 15, 2029 or two years after the substantial completion of the last Train of the Corpus Christi Stage 3 Project.

Cancellation of CCH Senior Secured Notes Contributed from Cheniere

During the nine months ended September 30, 2023, Cheniere repurchased $400 million of our Senior Secured Notes due 2027, 2029 and 2039 on the open market, with all of such repurchases immediately contributed to us from Cheniere for no consideration under the equity contribution agreements described in Note 11—Related Party Transactions, and cancelled by us. It was determined that for accounting purposes, Cheniere repurchased the bonds on our behalf as a principal as opposed to as an agent, and thus the debt extinguishment was accounted for as an extinguishment directly with Cheniere. We did not have any repurchases on the open market during the three months ended September 30, 2023 or during the three and nine months ended September 30, 2022.

Additionally, during the nine months ended September 30, 2023, we recorded a net distribution to Cheniere totaling $2 million from associated operating activities, inclusive of a $4 million distribution to Cheniere associated with write off of associated debt issuance costs and discount, offset by a $2 million contribution from Cheniere associated with interest paid by Cheniere on our behalf that was due at the time of the debt repayment. We did not record any such distributions from Cheniere during the three months ended September 30, 2023.

Restrictive Debt Covenants

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

As of September 30, 2023, we were in compliance with all covenants related to our debt agreements.

13

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

Interest Expense

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Total interest cost	$	81	$	119	$	245	$	356
Capitalized interest	(29)		(13)		(73)		(16)
Total interest expense, net of capitalized interest	$	52	$	106	$	172	$	340

Fair Value Disclosures

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

	September 30, 2023				December 31, 2022
	Carrying Amount		Estimated Fair Value (1)		Carrying Amount		Estimated Fair Value (1)
Senior notes	$	6,356	$	5,726	$	7,254	$	6,752

(1)As of both September 30, 2023 and December 31, 2022, $1.7 billion of the fair value of our senior notes were classified as Level 3 since these senior notes were valued by applying an unobservable illiquidity adjustment to the price derived from trades or indicative bids of instruments with similar terms, maturities and credit standing. The remainder of our senior notes are classified as Level 2, based on prices derived from trades or indicative bids of the instruments.

The estimated fair value of our credit facilities approximates the principal amount outstanding because the interest rates are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty.

NOTE 10—REVENUES

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues from contracts with customers
LNG revenues	$	872	$	1,737	$	2,793	$	4,661
LNG revenues—affiliate	385		1,126		1,222		2,560
Total revenues from contracts with customers	1,257		2,863		4,015		7,221
Net derivative gain (loss) (1)	2		—		(5)		7
Total revenues	$	1,259	$	2,863	$	4,010	$	7,228

(1)See Note 7—Derivative Instruments for additional information about our derivatives.

Contract Assets and Liabilities

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

	September 30,		December 31,
	2023		2022
Contract assets, net of current expected credit losses	$	176	$	144

14

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

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

	Nine Months Ended September 30, 2023
Deferred revenue, beginning of period	$	76
Cash received but not yet recognized in revenue	76
Revenue recognized from prior period deferral	(76)
Deferred revenue, end of period	$	76

Transaction Price Allocated to Future Performance Obligations

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

	September 30, 2023			December 31, 2022
	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)	Unsatisfied Transaction Price (in billions)		Weighted Average Recognition Timing (years) (1)
LNG revenues	$	50.0	10	$	50.9	10
LNG revenues—affiliate	1.1		9	1.2		8
Total revenues	$	51.1		$	52.1

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
LNG revenues	46	%	73	%	48	%	70	%
LNG revenues—affiliate	78	%	89	%	78	%	87	%

15

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 11—RELATED PARTY TRANSACTIONS

Below is a summary of our related party transactions, all in the ordinary course of business, as reported on our Consolidated Statements of Operations (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
LNG revenues—affiliate
SPAs and Letter Agreements with Cheniere Marketing, LLC (“Cheniere Marketing”)	$	385	$	1,022	$	1,222	$	2,394
Contracts for Sale and Purchase of Natural Gas and LNG with other affiliates	—		104		—		166
Total LNG revenues—affiliate	385		1,126		1,222		2,560
Cost of sales—affiliate
Contracts for Sale and Purchase of Natural Gas and LNG	14		47		43		95
SPAs and Letter Agreements with Cheniere Marketing	27		—		91		—
Total cost of sales—affiliate	41		47		134		95
Operating and maintenance expense—affiliate
Services Agreements (see Note 1)	27		28		84		86
Operating and maintenance expense—related party
Natural Gas Transportation Agreements (1)	3		2		7		7
General and administrative expense—affiliate
Services Agreements (see Note 1)	11		11		34		27

(1)This related party is a subsidiary of Cheniere’s equity method investment.

Equity Contribution Agreements

We have equity contribution agreements with Cheniere and certain of its subsidiaries (the “Equity Contribution Agreements”) pursuant to which Cheniere agreed to contribute any of CCH’s Senior Secured Notes that Cheniere has repurchased to CCH for no consideration. During the nine months ended September 30, 2023, Cheniere repurchased a total of $400 million of the outstanding principal amount of CCH’s Senior Secured Notes due 2027, 2029 and 2039 on the open market, which were immediately contributed under the Equity Contribution Agreements to us from Cheniere and cancelled by us. We did not have any repurchases on the open market during the three months ended September 30, 2023.

NOTE 12—CUSTOMER CONCENTRATION

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

	Percentage of Total Revenues from External Customers				Percentage of Trade and Other Receivables, Net and Contract Assets, Net from External Customers
	Three Months Ended September 30,		Nine Months Ended September 30,			September 30,	December 31,
	2023	2022	2023	2022		2023	2022
Customer A	22%	20%	22%	22%		14%	17%
Customer B	15%	15%	15%	15%		*	*
Customer C	16%	15%	14%	14%		*	*
Customer D	*	*	*	*		49%	33%
Customer E	*	13%	*	*		*	*
Customer F	*	12%	*	10%		*	*

* Less than 10%

16

CHENIERE CORPUS CHRISTI HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(unaudited)

NOTE 13—SUPPLEMENTAL CASH FLOW INFORMATION

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

	Nine Months Ended September 30,
	2023		2022
Cash paid during the period for interest on debt, net of amounts capitalized	$	215	$	225
Right-of-use assets obtained in exchange for new operating lease liabilities	1		3
Non-cash investing and financing activity:
Unpaid purchases of property, plant and equipment	164		66
Non-cash conveyance of property, plant and equipment	—		17
Non-cash contributions from affiliates for conveyance of assets	—		7
Cancellation of CCH Senior Secured Notes contributed to us from Cheniere (see Note 9)	400		30

We recorded $1.5 billion of contributions in our Consolidated Statements of Member’s Equity (Deficit) during the nine months ended September 30, 2022 related to the contribution of the CCL Stage III entity to us from Cheniere on June 15, 2022, with such contribution representing a non-cash financing activity. See Note 2—CCL Stage III Contribution and Merger for further discussion.

17

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

Information Regarding Forward-Looking Statements

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

•statements regarding our expected receipt of cash distributions from our subsidiaries; 

•statements that we expect to commence or complete construction of our proposed LNG terminal, liquefaction facility, pipeline facility 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 regarding our future sources of liquidity and cash requirements;

•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 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 pipelines, including the financing of such 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,” “achieve,” “anticipate,” “believe,” “contemplate,” “continue,” “estimate,” “expect,” “intend,” “plan,” “potential,” “predict,” “project,” “pursue,” “target,” the negative of such terms or other comparable terminology. The forward-looking statements contained in this quarterly report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe that such estimates are reasonable, they are inherently uncertain and involve a number of risks and uncertainties beyond our control. In addition, assumptions may prove to be inaccurate. We caution that the forward-looking statements contained in this quarterly report are not guarantees of future performance and that such statements may not be realized or the forward-looking statements or events may not occur. Actual results may differ materially from those anticipated or implied in forward-looking statements as a result of a variety of factors described in this quarterly report and in the other reports and other information that we file with the SEC, including those discussed under “Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2022. 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

18

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 

•Overview of Significant Events

•Results of Operations

•Liquidity and Capital Resources

•Summary of Critical Accounting Estimates

•Recent Accounting Standards

Overview

We are a Delaware limited liability company formed in 2014 by Cheniere. We provide clean, secure and affordable LNG to integrated energy companies, utilities and energy trading companies around the world. We aspire to conduct our business in a safe and responsible manner, delivering a reliable, competitive and integrated source of LNG to our customers.

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

We own and operate a natural gas liquefaction and export facility located near Corpus Christi, Texas (the “Corpus Christi LNG Terminal”) through CCL, which has natural gas liquefaction facilities consisting of three operational Trains for a total production capacity of approximately 15 mtpa of LNG, three LNG storage tanks with aggregate capacity of approximately 10 Bcfe and two marine berths that can each accommodate vessels with nominal capacity of up to 266,000 cubic meters. Additionally, we are constructing an expansion of the Corpus Christi LNG Terminal (the “Corpus Christi Stage 3 Project”) for seven midscale Trains with an expected total production capacity of over 10 mtpa of LNG.

We also own and operate through CCP a 21.5-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 Corpus Christi LNG Terminal and the Corpus Christi Stage 3 Project, the “Liquefaction Project”).

Our long-term customer arrangements form the foundation of our business and provide us with significant, stable, long-term cash flows. We have contracted most of our anticipated production capacity under SPAs, in which our customers are generally required to pay a fixed fee with respect to the contracted volumes irrespective of their election to cancel or suspend deliveries of LNG cargoes, and under IPM agreements, in which the gas producer sells natural gas to us on a global LNG index price, less a fixed liquefaction fee, shipping and other costs. Through our SPAs and IPM agreements, we have contracted approximately 90% of the total anticipated production capacity from the Liquefaction Project with approximately 18 years of weighted average remaining life as of September 30, 2023.

19

We remain focused on safety, operational excellence and customer satisfaction. Increasing demand for LNG has allowed us to expand our liquefaction infrastructure in a financially disciplined manner. We have increased available liquefaction capacity at our Liquefaction Project as a result of debottlenecking and other optimization projects. We hold a significant land position at the Corpus Christi LNG Terminal, which provides opportunity for further liquefaction capacity expansion. In March 2023, CCL and another subsidiary of Cheniere submitted an application with the FERC under the Natural Gas Act (“NGA”) for an expansion adjacent to the Liquefaction Project consisting of two midscale Trains with an expected total production capacity of approximately 3 mtpa of LNG (the “Midscale Trains 8 & 9 Project”). The development of the Midscale Trains 8 & 9 Project or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before a positive FID is made.

Additionally, we are committed to the management of our most important environmental, social and governance (“ESG”) impacts, risks and opportunities. In August 2023, Cheniere published The Power of Connection, its fourth Corporate Responsibility (“CR”) report, which details Cheniere’s approach and progress on ESG issues, including its collaboration with natural gas midstream companies, technology providers and leading academic institutions on life-cycle assessment (“LCA”) models, quantification, monitoring, reporting and verification (“QMRV”) of greenhouse gas emissions and other research and development projects. Cheniere also co-founded and sponsored the Energy Emissions Modeling and Data Lab (“EEMDL”), a multidisciplinary research and education initiative led by the University of Texas at Austin in collaboration with Colorado State University and the Colorado School of Mines. In addition, Cheniere commenced providing Cargo Emissions Tags (“CE Tags”) to our long-term customers in June 2022, and in October 2022 joined the Oil and Gas Methane Partnership (“OGMP”) 2.0, the United Nations Environment Programme’s (“UNEP”) flagship oil and gas methane emissions reporting and mitigation initiative. Cheniere’s CR report is available at cheniere.com/our-responsibility/reporting-center. Information on Cheniere’s website, including the CR report, is not incorporated by reference into this Quarterly Report on Form 10-Q.

Overview of Significant Events

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

Strategic

•In March 2023, CCL and another subsidiary of Cheniere submitted an application with the FERC under the NGA for the Midscale Trains 8 & 9 Project.

Operational

•As of October 26, 2023, over 800 cumulative LNG cargoes totaling approximately 55 million tonnes of LNG have been produced, loaded and exported from the Liquefaction Project.

Financial

•We received the following upgrades from credit rating agencies, each with a stable outlook:

Date	Previous Rating	Upgraded Rating	Rating Agency
October 2023	BBB-	BBB	S&P Global Ratings
August 2023	Baa3	Baa2	Moody’s Investor Service
July 2023	BBB-	BBB	Fitch Ratings

•In January 2023, we redeemed with cash on hand the remaining $498 million outstanding principal amount of our 7.000% Senior Secured Notes due 2024 (the “2024 CCH Senior Notes”).

20

Results of Operations

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2023		2022		Variance		2023		2022		Variance
Revenues
LNG revenues	$	874	$	1,737	$	(863)	$	2,788	$	4,668	$	(1,880)
LNG revenues—affiliate	385		1,126		(741)		1,222		2,560		(1,338)
Total revenues	1,259		2,863		(1,604)		4,010		7,228		(3,218)
Operating costs and expenses (recoveries)
Cost (recovery) of sales (excluding items shown separately below)	(443)		5,929		(6,372)		(3,114)		10,712		(13,826)
Cost of sales—affiliate	41		47		(6)		134		95		39
Operating and maintenance expense	125		119		6		359		350		9
Operating and maintenance expense—affiliate	27		28		(1)		84		86		(2)
Operating and maintenance expense—related party	3		2		1		7		7		—
General and administrative expense	2		2		—		4		6		(2)
General and administrative expense—affiliate	11		11		—		34		27		7
Depreciation and amortization expense	112		112		—		336		334		2
Other	2		1		1		2		5		(3)
Total operating costs and expenses (recoveries)	(120)		6,251		(6,371)		(2,154)		11,622		(13,776)
Income (loss) from operations	1,379		(3,388)		4,767		6,164		(4,394)		10,558
Other income (expense)
Interest expense, net of capitalized interest	(52)		(106)		54		(172)		(340)		168
Loss on modification or extinguishment of debt	—		(6)		6		(10)		(36)		26
Other income, net	2		2		—		7		5		2
Total other expense	(50)		(110)		60		(175)		(371)		196
Net income (loss)	$	1,329	$	(3,498)	$	4,827	$	5,989	$	(4,765)	$	10,754

Operational volumes loaded and recognized from the Liquefaction Project

	Three Months Ended September 30,			Nine Months Ended September 30,
(in TBtu)	2023	2022	Variance	2023	2022	Variance
Volumes loaded during the current period	186	196	(10)	566	585	(19)
Volumes loaded during the prior period but recognized during the current period	—	—	—	3	—	3
Volumes loaded at our affiliate’s facility	—	—	—	5	—	5
Total volumes recognized in the current period	186	196	(10)	574	585	(11)

Net income (loss)

Substantially all of the favorable variances of $4.8 billion and $10.8 billion for the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022 were attributable to favorable changes in fair value and settlements of derivatives of $4.9 billion and $10.8 billion, respectively, between the periods, of which $1.0 billion and $4.4 billion, respectively, related to non-cash favorable changes in fair value of our IPM agreements where we procure natural gas at a price indexed to international gas prices as a result of lower volatility in international gas prices compared to the same periods of 2022 and declines in international forward commodity curves.

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

Revenues

Substantially all of the $1.6 billion and $3.2 billion decreases between the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022, were attributable to $1.5 billion and $3.0 billion decreases, respectively, from lower pricing per MMBtu as a result of decreased Henry Hub pricing.

Operating costs and expenses (recoveries)

The $6.4 billion and $13.8 billion favorable variances between the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022, were primarily attributable to:

•$4.9 billion and $10.8 billion favorable variances between the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022, from changes in fair value and settlements of derivatives included in cost of sales, from $3.9 billion and $5.8 billion of losses in the three and nine months ended September 30, 2022, respectively, to $1.0 billion and $5.0 billion of gains in the three and nine months ended September 30, 2023, respectively, primarily due to decreased international gas prices resulting in non-cash favorable changes in fair value of our commodity derivatives indexed to such prices and, to a lesser extent, an increase in forward notional amount of derivatives due to agreements contributed to us upon the merger of CCL Stage III with and into CCL in June 2022; and

•$1.5 billion and $3.0 billion decreases between the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022, in cost of sales excluding the effect of derivative changes described above, primarily as a result of $1.3 billion and $2.8 billion, respectively, in decreased cost of natural gas feedstock largely due to lower U.S. natural gas prices.

Other income (expense)

The $60 million and $196 million decreases between the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022, were primarily attributable to:

•$54 million and $168 million decreases in interest expense, net of capitalized interest, between the three and nine months ended September 30, 2023, respectively, as compared to the same periods of 2022, as a result of lower debt balances due to repayment of debt, as further detailed under Financing Cash Flows in Sources and Uses of Cash within Liquidity and Capital Resources. Additionally, the decrease in interest expense, net of capitalized interest between the comparable nine month periods is due to a higher portion of total interest costs eligible for capitalization following the issuance of full notice to proceed to Bechtel Energy Inc. (“Bechtel”) on the Corpus Christi Stage 3 Project in June 2022; and

•$26 million decrease in loss on modification or extinguishment of debt between the nine months ended September 30, 2023 as compared to the same period of 2022, primarily due to higher losses recognized from the amendment and restatement of our term loan facility agreement (the “CCH Credit Facility”) and our working capital facility agreement (the “CCH Working Capital Facility”) during the second quarter of 2022 compared to the premiums paid for the early redemption of the 2024 CCH Senior Notes during the nine months ended September 30, 2023 as further described in Overview of Significant Events.

Significant factors affecting our results of operations

Below are significant factors that affect our results of operations.

Gains and losses on derivative instruments

Derivative instruments, which in addition to managing exposure to commodity-related marketing and price risks are utilized to manage exposure to changing interest rates volatility, are reported at fair value on our Consolidated Financial Statements. For commodity derivative instruments related to our IPM agreements, the underlying LNG sales being economically hedged are accounted for under the accrual method of accounting, whereby revenues expected to be derived from the future LNG sales are recognized only upon delivery or realization of the underlying transaction. Because the recognition of

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derivative instruments at fair value has the effect of recognizing gains or losses relating to future period exposure, and given the significant volumes, long-term duration and volatility in price basis for certain of our derivative contracts, use of derivative instruments may result in continued volatility of our results of operations based on changes in market pricing, counterparty credit risk and other relevant factors that may be outside of our control, notwithstanding the operational intent to mitigate risk exposure over time.

Liquidity and Capital Resources

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

	September 30, 2023
Restricted cash and cash equivalents designated for the Liquefaction Project	$	130
Available commitments under our credit facilities (1):
CCH Credit Facility	3,260
CCH Working Capital Facility	1,345
Total available commitments under our credit facilities	4,605
Total available liquidity	$	4,735

(1)Available commitments represent total commitments less loans outstanding and letters of credit issued under each of our credit facilities as of September 30, 2023. See Note 9—Debt of our Notes to Consolidated Financial Statements for additional information on our credit facilities and other debt instruments.

Our liquidity position subsequent to September 30, 2023 will be driven by future sources of liquidity and future cash requirements. Future sources of liquidity are expected to be composed of (1) cash receipts from executed contracts, under which we are contractually entitled to future consideration, and (2) additional sources of liquidity, from which we expect to receive cash although the cash is not underpinned by executed contracts. Future cash requirements are expected to be composed of (1) cash payments under executed contracts, under which we are contractually obligated to make payments, and (2) additional cash requirements, under which we expect to make payments although we are not contractually obligated to make the payments under executed contracts. For further discussion of our future sources and uses of liquidity, see the liquidity and capital resources disclosures in our annual report on Form 10-K for the fiscal year ended December 31, 2022.

Supplemental Guarantor Information

The 5.875% Senior Secured Notes due 2025, 5.125% Senior Secured Notes due 2027, 3.700% Senior Secured Notes due 2029 and the series of Senior Secured Notes due 2039 with weighted average rate of 3.788% (collectively, the “CCH Senior Secured Notes”) are jointly and severally guaranteed by each of our consolidated subsidiaries, CCL, CCP and Corpus Christi Pipeline GP, LLC (each a “Guarantor” and collectively, the “Guarantors”).

The Guarantors’ guarantees are full and unconditional, subject to certain release provisions including (1) the sale, exchange, disposition or transfer (by merger, consolidation or otherwise) of all or substantially all of the capital stock or the assets of the Guarantors, (2) the designation of the Guarantor as an “unrestricted subsidiary” in accordance with the indentures governing the CCH Senior Secured Notes (the “CCH Indentures”), (3) upon the legal defeasance or covenant defeasance or discharge of obligations under the CCH Indentures and (4) the release and discharge of the Guarantors pursuant to the Common Security and Account Agreement. In the event of a default in payment of the principal or interest by us, whether at maturity of the CCH Senior Secured Notes or by declaration of acceleration, call for redemption or otherwise, legal proceedings may be instituted against the Guarantors to enforce the guarantee.

The rights of holders of the CCH Senior Secured Notes against the Guarantors may be limited under the U.S. Bankruptcy Code or federal or state fraudulent transfer or conveyance law. Each guarantee contains a provision intended to limit the Guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent conveyance or transfer under U.S. federal or state law. However, there can be no assurance as to

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what standard a court will apply in making a determination of the maximum liability of the Guarantors. Moreover, this provision may not be effective to protect the guarantee from being voided under fraudulent conveyance laws. There is a possibility that the entire guarantee may be set aside, in which case the entire liability may be extinguished.

Summarized financial information about us and the Guarantors as a group is omitted herein because such information would not be materially different from our Consolidated Financial Statements.

Corpus Christi Stage 3 Project

The following table summarizes the project completion and construction status of the Corpus Christi Stage 3 Project as of September 30, 2023:

Overall project completion percentage	44.1%
Completion percentage of:
Engineering	74.1%
Procurement	63.3%
Subcontract work	55.9%
Construction	7.5%
Date of expected substantial completion	2Q/3Q 2025 - 2H 2026

Sources and Uses of Cash

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

	Nine Months Ended September 30,
	2023		2022
Net cash provided by operating activities	$	1,228	$	1,234
Net cash used in investing activities	(1,195)		(618)
Net cash used in financing activities	(641)		(458)
Net increase (decrease) in restricted cash and cash equivalents	$	(608)	$	158

Operating Cash Flows

The $6 million decrease in operating cash flows between the nine months ended September 30, 2023 and 2022 was primarily related to lower cash receipts from the sale of LNG cargoes from lower pricing per MMBtu as a result of decreased Henry Hub pricing, which was partially offset by lower cash outflows for natural gas feedstock, mostly due to lower U.S. natural gas prices.

Investing Cash Flows

Our investing net cash outflows in both years primarily were for the construction costs for the Liquefaction Project. The $577 million increase in 2023 compared to 2022 was primarily due to $1.0 billion of cash outflows during the nine months ended September 30, 2023 related to construction of the Corpus Christi Stage 3 Project following our issuance of full notice to proceed to Bechtel in June 2022 compared to $545 million in the comparable period of 2022. We expect our capital expenditures to increase in future periods as construction work progresses on the Corpus Christi Stage 3 Project.

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Financing Cash Flows

The following table summarizes our financing activities (in millions):

	Nine Months Ended September 30,
	2023		2022
Proceeds from issuances of debt	$	—	$	440
Repayments of debt	(498)		(2,419)
Debt issuance costs	—		(44)
Debt extinguishment costs	(8)		(18)
Contributions	105		1,583
Distributions	(240)		—
Net cash used in financing activities	$	(641)	$	(458)

Debt Issuances and Related Financing Costs

The following table shows the issuances of debt, including intra-quarter borrowings (in millions):

	Nine Months Ended September 30,
	2023		2022
CCH Credit Facility	$	—	$	440
Total debt issuances	$	—	$	440

Repayments and Related Extinguishment Costs

The following table shows the repayments of debt, including intra-quarter repayments (in millions):

	Nine Months Ended September 30,
	2023		2022
CCH Credit Facility	$	—	$	(2,169)
CCH Working Capital Facility	—		(250)
2024 CCH Senior Notes	(498)		—
Total repayments of debt	$	(498)	$	(2,419)

Capital Contributions and Distributions

During the nine months ended September 30, 2023 and 2022, we received cash capital contributions of $105 million and $1.6 billion, respectively, from Cheniere, used to fund working capital and in 2022 to primarily pay down our outstanding debt, and during the nine months ended September 30, 2023 and 2022, we made cash distributions of $240 million and zero, respectively, to Cheniere.

Summary of Critical Accounting Estimates

The preparation of 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 fiscal year ended December 31, 2022.

Recent Accounting Standards 

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

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Marketing and Trading Commodity Price Risk

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

	September 30, 2023				December 31, 2022
	Fair Value		Change in Fair Value		Fair Value		Change in Fair Value
Liquefaction Supply Derivatives	$	(1,263)	$	1,246	$	(6,278)	$	1,684

See Note 7—Derivative Instruments of our Notes to Consolidated Financial Statements for additional details about the 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 Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As of the end of the period covered by this report, we evaluated, under the supervision and with the participation of our management, including our 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. 

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PART II.    OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

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

ITEM 1A.    RISK FACTORS

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

ITEM 6.    EXHIBITS

Exhibit No.	Description
10.1*	Change orders to the Lump Sum Turnkey Agreement for the Engineering, Procurement and Construction of the Corpus Christi Liquefaction Stage 3 Project, dated March 1, 2022, by and between CCL and Bechtel Energy, Inc.: (i) the Change Order CO-00036 Payment Milestone Updates (Schedule C-1), dated June 19, 2023, (ii) the Change Order CO-00037 Geotechnical Soils Investigation Period & Security Division of Responsibility Change, dated June 20, 2023, (iii) the Change Order CO-00038 Power Monitoring System (ETAP HMI), dated June 29, 2023 and (iv) the Change Order CO-00039 EFG Firewater Connection, dated June 30, 2023 (Portions of this exhibit have been omitted.)
22.1	List of Issuers and Guarantor Subsidiaries (Incorporated by reference to Exhibit 22.1 to the Company’s Registration Report on Form S-4 (SEC File No. 333-215435), filed on March 11, 2022)
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
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith.
**	Furnished herewith.

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SIGNATURES

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

		CHENIERE CORPUS CHRISTI HOLDINGS, LLC
Date:	November 1, 2023	By:	/s/ Zach Davis
			Zach Davis
			President and Chief Financial Officer
			(Principal Executive and Financial Officer)
Date:	November 1, 2023	By:	/s/ David Slack
			David Slack
			Chief Accounting Officer
			(on behalf of the registrant and as principal accounting officer)

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