# DEAR FELLOW SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/NYSE_RRC_2017/NYSE_RRC_2017.mmd` · pages 1-7_

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DEAR FELLOW SHAREHOLDERS

As we look back over the past year, we saw much improved financial results in 2017 with increases in earnings, cash flow, revenues and production as compared to 2016. We saw revenues up by 137% with a net income of \(333 million, compared to a loss of \)521 million in 2016, while production increased by 30% as well. Operationally, the Marcellus continues to drive growth and profitability, with increasing capital efficiency. Outstanding drilling results during the year expanded the core inventory in all directions. After years of planning, our marketing strategy will be fully implemented in 2018 and is expected to improve our netback pricing going forward as Range accesses growing demand for natural gas and NGLs, particularly in the expanding export markets. We are slowing activity in North Louisiana following disappointing results in 2017, which will allow time for additional technical analysis that we expect will improve results in 2018.

In January, we released a five-year outlook designed to show what Range can accomplish over the next five years and beyond in terms of reducing debt and generating cash flow. As part of that outlook, Range expects annual production growth of approximately 11%, or close to 13% on a debt-adjusted per share basis, while generating roughly $1 billion of cumulative free cash flow at year-end 2017 strip pricing. Growing production at an estimated 11% and spending within cash flow at strip pricing provides a path to significantly reduce our leverage. Our expectation is that under this outlook, we will reach a net debt to EBITDAX ratio of approximately 3x by 2020, and below 2x by 2022—without assuming any asset sales. Any proceeds from our efforts to sell non-core assets can accelerate this deleveraging process. In the meantime, our hedging program supports near-term cash flow.

We also expect to improve our margins with greater access to better markets and continued improvement to the Company's cost structure through utilization of existing infrastructure and lower interest expense. Our five-year outlook assumes all production growth is from Range's Marcellus inventory, while North Louisiana production is assumed to remain steady from year-end 2018 through the remainder of the plan. Importantly, at the end of the five-year outlook, Range would still have over 3,200 locations in the core of the Marcellus alone. As our peers in the industry exhaust their core inventories over the next few years, we believe Range will be well-positioned with a long runway of high-quality drilling locations from which we can derive long-term value.

In our view, we have entered a new era of shale development where companies that have captured the most prolific resources have the ability to generate better returns for their shareholders. For Range, the flagship asset and growth driver of the Company will continue to be our large, high-quality, de-risked inventory in southwestern Pennsylvania. The quality of our assets allows Range to improve corporate returns and our leverage profile, while generating competitive growth of production and reserves on a debt-adjusted per share basis. And, of course, this will all be accomplished while maintaining our commitment to good stewardship of the environment and operating safely.
We also see several positives in the immediate term. In late 2017 and early 2018, two of three natural gas pipeline projects came on line, moving Marcellus gas from southwestern Pennsylvania to more favorable Gulf Coast markets. Enbridge's TETCO Adair Southwest project commenced service during the fourth quarter 2017 and TransCanada's Leach and Rayne Xpress project commenced full service in January 2018. In addition, Energy Transfer's Rover pipeline (phase 2) is expected to reach full completion in second quarter 2018, and is the last major natural gas transportation project for which Range has contracted for capacity. Once these projects are fully in service, approximately 90% of Range's 2018 gas price exposure is expected to be in favorable markets. Importantly, these upgrades to Range's transportation portfolio reduce basis volatility, especially during seasonally weak months, and should increase the predictability of Range's corporate natural gas basis differential going forward.

Notably, our natural gas basis differentials have already shown dramatic improvement over the last three years. In 2015, our differential was NYMEX minus 52 cents, which improved to minus 45 cents in 2016, and further improved to minus 32 cents in 2017. Our projection for 2018 is that our basis could improve to NYMEX minus 15 cents, which would reflect a significant year-over-year improvement. Along the same lines, our condensate differentials have also greatly improved, from WTI less \(15 per barrel in 2015, to WTI less \)9 per barrel in 2016, and WTI less $5 per barrel in 2017. Our 2018 projections have us at WTI less $5 to $6 per barrel. NGLs, which were 18% of WTI in 2015, are projected to be approximately 30% of WTI in 2018.

In 2017, our proved reserves increased 26% from the prior year to 15.3 Tcfe, with drill bit finding costs at an all-time company low of \(0.31 per mcfe. Positive performance revisions also continued in 2017 as we extended lateral lengths, improved targeting and drove efficiencies throughout our developed leasehold and infrastructure. Future development costs for proven undeveloped locations are estimated to be \)0.38 per mcfe, which should improve our top tier unhedged recycle ratio to approximately 3x. Importantly, Range added a record 3.5 Tcfe to proved reserves from extensions, discoveries and additions, driven primarily by our large inventory of low-risk, high-return projects in the Marcellus Shale.

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Going forward, we expect to see continued capital efficiency gains. Our team hit a new milestone in 2017, drilling the longest Marcellus lateral in Pennsylvania and three of the top four longest laterals in the Marcellus. We anticipate driving down normalized well costs with longer laterals (estimated to average nearly 10,000 feet in the Marcellus in 2018), with approximately half of our 2018 wells on existing pads — and enhanced recoveries as a result of improved targeting and completions. We are achieving a significant increase in daily lateral footage drilled versus two years ago, and we've accomplished all of this while narrowing our lateral target window and drilling faster—enabling us to lower costs from 2016 on a per-foot basis by over 30%. As a result, we now have the most productive wells per thousand feet of lateral in the southwest portion of the Marcellus.

And while our new outlook focuses on the next five years, looking beyond that, in 2022 we will have the ability to hold production of 3.5 Bcfe per day flat for approximately $600 million per year of maintenance capital. This could give Range the ability to return more cash to shareholders in the form of increased dividends and/or share repurchases. Also, with 3,200 core Marcellus wells remaining post-2022, we would anticipate over 30 years of inventory holding production at 3.5 Bcfe per day. Finally, the size and quality of Range's remaining inventory, combined with improved access out of Southwest Appalachia, can provide Range with a growth option. Range could potentially generate annual growth of greater than 20% from 2023-2025 and generate over $1 billion of free cash flow over that time frame; all while the Lower Cotton Valley, Deep Utica, and Upper Devonian extend the runway for free cash flow generation and growth.

We are acutely aware that the Company's stock price is not where we'd like it to be. Although we had another year of success in the Marcellus, we didn't see the results we expected in North Louisiana. The asset has proven to be more geologically complex than originally anticipated, and productivity of the wells overall has been below our expectations. In response, we plan to allocate an estimated 15% of our capital to our North Louisiana operations in 2018, with 85% going toward the Marcellus. We have new leadership overseeing this division, and believe we have the right team in place to unlock the greatest potential for these assets.

As we take a final look back at 2017, I want to recognize our teams across the company for their commitment to safety and environmental compliance. Our safety record in 2017 included no days away from work and one recordable incident for the year. Our focus on further reducing methane emissions over the last several years led to Range being recognized in 2017 as a top performer in the area of emissions by the nonprofit organization As You Sow, as shown on our website here.
I also want to acknowledge Range's greatest asset: our employees. Once again in 2017, Range employees volunteered their time and talents to give back to those in need, all across the country. Our civic engagement programs are designed to have long-term sustainable positive impacts on organizations tied to our communities, and our corporate giving program has donated nearly $10 million to nonprofit and civic organizations in recent years. Last year, Range contributed $100,000 to the American Red Cross efforts in Houston, Texas after hurricane-related flooding, while employees pulled together to support neighbors in need. Employees also generated tens of thousands of dollars to support the community around the holidays by raising funds for area food banks and distributing toys for children in need throughout the Company's operating areas.

Our employees have always been the driving force behind the Company's success. Their continued commitment to innovation, social responsibility, and constantly seeking the answer to the question "how can we do this better?" is among the critical components that will propel us forward as we execute our five-year outlook. High-quality inventory and core locations that will produce for many years beyond those of most other companies, along with growing demand—particularly in the international markets—will also be key to fulfilling our expectations of creating greater value for our shareholders.

I want to thank our Board of Directors for their leadership year after year, and their guidance during the development of our strategy for long-term value creation and growth. We also congratulate the Board for having been recognized for diversity and good corporate governance by the nonprofit organization Women on Board.

And finally, we thank you, our loyal shareholders, for your continued faith in our company. We are in the midst of an American energy revolution that is providing our country with affordable energy, improved air quality, and greater economic prosperity. We are highly focused on continuing to earn your support, and appreciate your feedback as we work together toward a bright future for Range Resources.

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JEFFREY L. VENTURA

Chairman, President & Chief Executive Officer

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