Derivative Instruments

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

At June 30, 2022, the Company held a series of three call options (“the Call Options”) for the purchase of natural gas associated with a long-term LNG sales contract with a significant customer. The Call Options are for a total of 2.0 million metric million British thermal units ("MMBtu") of natural gas over a period of approximately two years. The Company purchased the Call Options to manage the risk that the price to acquire natural gas would exceed the maximum price it can charge its customer. The Company recognizes all of its derivative instruments as either assets or liabilities which are recorded at fair value on its Consolidated Balance Sheet. The fair value of the Call Options are predominantly determined from broker quotes and are considered a level 2 fair value measurement. The following table presents the location and fair value of the Call Options at June 30, 2022 and December 31, 2021 (in thousands):


Location on Condensed Consolidated Balance Sheet	June 30, 2022(1)		December 31, 2021(2)
Prepaid expenses and other current assets (3)	$	627	$	—
Right-of-use assets and other noncurrent assets (3)	499		—
	$	1,126	$	—

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(1) Amounts are presented on a gross basis.

(2) The Company did not have any derivative instruments at December 31, 2021.

(3) The classification between current and noncurrent assets is based upon when the Call Options mature.

The Company has not designated the Call Options as a hedge under U.S. GAAP and all resulting gains and losses from changes in the fair value of its derivative instruments are included within change in unrealized loss on natural gas derivatives within the Company's Condensed Consolidated Statement of Operations. The table below presents the changes in the fair value of the Call Options for the three and six months ended June 30, 2022 as well as their net realized gains and losses.


	Three Months Ended June 30,				Six Months Ended June 30,
Changes in fair value of derivatives	2022		2021(1)		2022		2021(1)
Fair value of natural gas derivatives, beginning of period	$	—	$	—	$	—	$	—
Purchases of natural gas derivatives (2)	2,241		—		2,241		—
Unrealized gains (losses) transferred to realized gains (losses), net (2)	(216)		—		(216)		—
Change in unrealized loss on natural gas derivatives (3)	(899)		—		(899)		—
Fair value of natural gas derivatives, end of period	$	1,126	$	—	$	1,126	$	—

	Three Months Ended June 30,				Six Months Ended June 30,
Realized gain (loss) from derivative instruments	2022		2021(1)		2022		2021(1)
Unrealized gains (losses) transferred to realized gains (losses), net (2)	$	(216)	$	—	$	(216)	$	—
Derivative payments received (2)	380		—		380		—
Realized gain (loss) from natural gas derivatives, net (4)	$	164	$	—	$	164	$	—

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(1) The Company did not have any derivative instruments at December 31, 2021.

(2) Amount is presented within the Company's Condensed Consolidated Statement of Cash Flows within changes in prepaid expenses and other current assets and other.

(3) Amounts are presented as its own separate line item within the the Company's Condensed Consolidated Statement of Operations and Condensed Consolidated Statement of Cash Flows.

(4) Amounts are included within cost of LNG product on the Company's Condensed Consolidated Statement of Operations.

The Company may enter into forward sales contracts for the delivery of LNG These contracts are not accounted for as derivatives, but accounted for under the normal purchase normal sales exclusion under U.S. GAAP and are not measured at fair value each reporting period.