# DEAR FELLOW
SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/NYSE_AR_2017/NYSE_AR_2017.mmd` · pages 2-8_

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DEAR FELLOW
SHAREHOLDERS,

Antero Resources (NYSE: AR) achieved another outstanding year of performance in 2017, further solidifying the Company's leadership position in the Appalachian Basin. The successful execution of our development plan resulted in net production growth of 22% to 2.25 Bcfe/d, including liquids production of approximately 105,000 Bbl/d. Importantly, we delivered peer-leading growth with a drilling and completion capital investment of just under $1.3 billion, unchanged from the prior year. We successfully grew our net proved reserves by 12% to 17.3 Tcfe, including a 21% increase in proved developed producing reserves. Importantly, our net proved 3P reserves grew

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by 18% to 54.6 Tcfe. While we are proud of the significant achievements and successes in 2017, our focus is on the future. After years of investing in and executing our unwavering strategy, we have reached an inflection point and are poised to harvest the benefits of our world-class resource base. In January of 2018, at Antero's first-ever analyst day, we rolled out our five-year outlook. Its focus is on sustainable cash-flow growth with a disciplined focus on full-cycle returns. The five-year outlook is supported by a new long-lateral development plan that includes 815 wells that average more than 11,500 feet in lateral length. This new development plan takes advantage of our core contiguous-acreage position. Building upon the operational and capital efficiencies we have achieved to-date, this comprehensive development plan leverages our size and scale to capitalize on our low-cost per unit, liquids-rich resource base. As a result, we expect Antero to join an elite group of U.S. exploration and production companies with scale, double-digit production growth, capital spending discipline within cash flow, and low leverage. This dynamic profile positions the Company to begin to return capital to our shareholders over the coming years.

## MARCELUS SHALE DEVELOPMENT

Antero Resources continued to be one of the most active operators in the Marcellus Shale in 2017, running an average of five drilling rigs during the year. We turned 113 wells to sales in the Marcellus, contributing to a 38% increase in net production to 1.85 Bcfe/d, including 90,000 Bbl/d of liquids. Through strategic acquisitions and leasing, we increased our core acreage position by 20,000 net acres. This resulted in a core contiguous acreage position that allows for long-lateral drilling and very efficient midstream operations. Our new development plan and operational efficiencies in combination with the additions to our core acreage position enabled the Company to grow our proved and combined 3P reserves in the Marcellus to 15.6

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Tcfc and 48.3 Tcfc, respectively. Reduced cycle time as well as improved productivity drove an attractive improvement in well economics. The majority of our development activity in 2017 was focused on our liquids-rich acreage position. We continue to realize the benefits of strong liquids pricing, which only started to impact our financials during the third quarter of 2017. Going forward, strong liquids pricing is expected to continue to lead to higher economic returns. At year-end 2017, the Sherwood processing complex had rich-gas processing capacity of 1.8 Bcf/d, including a 40,000 Bbl/d de-ethanizer facility. In the coming 18 months, we expect three more 200 MMcf/d processing units placed in service at Sherwood. This will further support the growth of our liquids-rich gas production. We also expect the second phase of the Rover pipeline to be operational in 2018, providing strategic optionality linking our Marcellus and Utica positions.

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## UTICA SHALE DEVELOPMENT

Two significant operational improvements characterized the activity in the Utica Shale during 2017: 1) 22 wells were turned to sales, contributing to production surpassing 500 MMcfd at year-end, including over 15,000 Bbl/d of liquids; and 2) we turned our first 10-well dry gas pad to sales. These wells continue to perform above expectations, maintaining over 200 MMcfd of production during the first 140 days, reinforcing the success we can achieve utilizing longer laterals and enhanced completions in our Utica play. Our core acreage position is now 136,000 net acres, roughly in line with the prior year. Throughout 2017, our focus remained on retaining high-graded acreage. With 600 MMcfd of committed processing capacity in place at the Seneca processing complex, we continue to execute

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"The year ahead will be a transitional year for Antero Resources.

In 2018, we will focus on cash-flow growth and strong full-cycle returns to take us from resource capture and delineation into harvest mode.

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our development plan with a one-rig program in 2018. With Rover Phase 1 in service, we now have sufficient takeaway capacity to enable us to send greater volumes to the attractively-priced Chicago and Gulf Coast markets. Antero Midstream also continued its just-in-time asset build-out in the Utica play, thereby ensuring availability of the gathering and water infrastructure required to support ongoing development.

## FUTURE-READY GROWTH

The year ahead will be a transitional year for Antero Resources. In 2018, we will focus on cash-flow growth and strong full-cycle returns to take us from resource capture and delineation into harvest mode. As one of the largest NGL producers in the United States, Antero is well positioned to capitalize on improving liquids pricing. The combination of increasing capital efficiencies and our exposure to liquids puts Antero on the path to generating free cash flow in the coming years. Investors can remain confident in our coordinated development plan with Antero Midstream. The plan provides a low risk, long-term outlook. Free cash flow generation will lead to accelerated debt reduction and attractive debt-adjusted production growth rates over the next five years. In addition to the boost we expect from the Rover pipeline, the Mariner East 2 NGL pipeline to Marcus Hook is expected to be placed into service in 2018. The completion of the Mariner East 2 pipeline will deliver Antero's first C3+NGL pipeline takeaway capacity, improving liquids price realizations as we move

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into 2019. We continue to monitor our core areas for additional expansion opportunities in both the upstream and midstream businesses, and remain focused on sustainable, long-term value creation.

## ANTERO MIDSTREAM EXPANSION

Antero Midstream is an integrated midstream service provider whose primary role is to support the growth of Antero Resources in Appalachia. We currently own 53% of the Antero Midstream units. Through its gathering and compression business, Antero Midstream delivers low-pressure gathering, compression, and high-pressure gathering services for Antero Resources through its water business. Antero Midstream delivers fresh-water as well as flowback and produced-water services for Antero Resources. The start-up of the 60,000 Bbl/d Antero Clearwater Facility will

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position Antero Midstream at the forefront of water management and conservation among U.S. shale producers. Value chain diversification was achieved in February 2017 through an $800 million processing and fractionation joint venture with MPLX (NYSE: MPLX). Of the seven new Sherwood processing plants planned for the joint venture, three are currently in service. An additional four plants are projected to come online over the next 12-18 months. These assets will continue to contribute to growth and profitability in the coming years. Overall, 2017 was another year of continued growth and value chain build-out for Antero Midstream. The momentum continues into 2018.

## THE PEOPLE OF ANTERO

We want to express appreciation for the hard work and dedication of our talented employees. The people of Antero Resources generate value creation and momentum year after year in what has been a very difficult market environment. Their skills and expertise in assembling and executing world-class projects represent the true strength and competitive advantage of Antero Resources. We are also grateful for the guidance and support of our Board of Directors. We thank you, our shareholders, for investing in our Company and look forward to continued success in 2018, and for many years to come.

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PAUL M. RADY
Chairman and CEO
Co-Founder

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GLEN C. WARREN, JR.
President, CFO and Director
Co-Founder