At September 30, 2021, we were
liable for certain contingent
obligations under various contractual
arrangements
as described below.
We recognize a liability,
at inception, for the fair value
of our obligation as a guarantor
for
newly issued or modified guarantees.
Unless the carrying amount of the liability is noted below,
we have not
recognized a liability because the
fair value of the obligation
is immaterial.
In addition, unless otherwise stated, we
are not currently performing with any
significance under the guarantee and expect
future performance to be
either immaterial or have only a remote
chance of occurrence.
APLNG Guarantees
At September 30, 2021, we had outstanding
multiple guarantees in connection with our
37.5
interest in APLNG.
The following is a description of the guarantees
with values calculated utilizing September
2021
●
During the third quarter of 2016, we issued a guarantee
to facilitate the withdrawal
of our pro-rata portion
of the funds in a project finance reserve account.
We estimate the remaining
term of this guarantee
is
9
years
.
Our maximum exposure under this guarantee
is approximately $
170
million and may become payable
if an enforcement action is commenced by
the project finance lenders against
APLNG.
At September 30,
2021, the carrying value of this guarantee
was $
14
●
In conjunction with our original purchase of an ownership
interest in APLNG from Origin Energy
Limited in
October 2008, we agreed to reimburse
Origin Energy Limited for our share
of the existing contingent liability
arising under guarantees of an existing
obligation of APLNG to deliver natural
gas under several sales
agreements with remaining terms of
1 to 21 years
.
Our maximum potential liability for future
payments, or
cost of volume delivery,
under these guarantees is estimated
to be $
670
1.2
intentional or reckless breach) and
would become payable if APLNG fails
to meet its obligations under these
agreements and the obligations
cannot otherwise be mitigated.
Future payments are considered
unlikely,
as
the payments, or cost of volume delivery,
would only be triggered if APLNG does not have
enough natural
gas to meet these sales commitments
and if the co-venturers
do not make necessary equity contributions
●
We have guaranteed
the performance of APLNG with regard
to certain other contracts executed
in
connection with the project’s continued
development.
The guarantees have
remaining terms of
15 to 24
years
or the life of the venture.
Our maximum potential amount of future payments
related to these
guarantees is approximately
$
180
million and would become payable
if APLNG does not perform.
At
September 30, 2021, the carrying value of these guarantees
was $
11
Other Guarantees
We have other guarantees
with maximum future potential payment
amounts totaling approximately
$
720
which consist primarily of guarantees
of the residual value of leased office buildings, guarantees
of the residual
value of corporate aircrafts,
and a guarantee for our portion
of a joint venture’s
project finance reserve accounts.
These guarantees have remaining
terms of
one to five years
and would become payable if certain asset
values are
lower than guaranteed amounts
at the end of the lease or contract term, business
conditions decline at
guaranteed entities, or as a result
of nonperformance of contractual
terms by guaranteed parties.
At September
30, 2021, the carrying value of these guarantees
was $
11
Indemnifications
Over the years, we have entered
into agreements to sell ownership
interests in certain legal entities,
joint ventures
and assets that gave rise to
qualifying indemnifications.
These agreements include indemnifications for
taxes,
lease commitments and environmental
liabilities.
Those related to environmental
issues have terms that are
generally indefinite and the maximum
amounts of future payments are
generally unlimited.
The carrying amount
recorded for these indemnification
obligations at September 30, 2021, was $
30
indemnification liability over the relevant
time period the indemnity is in effect, if one exists,
based on the facts
and circumstances surrounding each type
of indemnity.
In cases where the indemnification term is
indefinite, we
will reverse the liability when we have
information the liability is essentially
relieved or amortize the liability over
an appropriate time period as the fair
value of our indemnification exposure
declines.
Although it is reasonably
possible future payments may exceed
amounts recorded, due to the nature
of the indemnifications, it is not
possible to make a reasonable estimate
of the maximum potential amount
of future payments.
for
additional information about environmental
liabilities
.