# Dear Fellow Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/NYSE_RRC_2018/NYSE_RRC_2018.mmd` · pages 1-7_

---

Dear Fellow Shareholders

In early 2018, we set our sights on our multi-year outlook with a focus on disciplined spending, improving margins, leverage reduction, and capital efficiency that would result in strong debt-adjusted per share growth and cumulative free cash flow of approximately $1 billion over five years. We are proud to say that Range delivered on these objectives and more in 2018. Entering 2019, our focus remains the same, and our revised outlook has the added benefit of increased flexibility with an acceleration of free cash flow generation.

Before reviewing the year, we want to acknowledge that 2018 was a difficult year for Range, as well as the industry. On average, Range's stock, and the stocks of our SW Appalachia peers and our 16-company peer group, were all down approximately 40% in 2018. We are taking steps to improve Range's performance in 2019 and beyond, and we believe that generating free cash flow while moderately growing production can only be achieved by a few companies at the current forward price curve. Range, being one of those companies, has the opportunity to capitalize on its high-quality assets in an environment of capital discipline. Combined with our anticipated debt reduction and achieving operational targets, we believe this should translate into a better-performing share price throughout the year.

Range's capital spending was \(910 million in 2018, \)31 million under budget for the year, while we grew production approximately 10% year-over-year to a record 2,201 Mmcfe per day. A key theme for Range in 2018 was our ability to drill long laterals in the Marcellus, resulting in a lower cost per foot. During the year, Range drilled wells with laterals averaging 10,300 feet, an increase of 8% compared to 2017. We also increased footage drilled per rig by 20% and, with these efficiency gains, reduced the drilling cost per foot by as much 30%. Water recycling also played a significant role in our program during the year. By recycling 100% of Range's water in southwest Pennsylvania and taking water from nearby third parties, we not only minimized our environmental footprint, but realized significant capital savings that contributed to the annual underspend. We think capital discipline means executing on the capital plans that are communicated to investors at the beginning of the year. In 2018, Range accomplished this and more, all while continuing our commitment to efficient and safe operations. This continued focus on disciplined spending and safety is what you can expect from Range in 2019 and beyond.

For years our team has been developing a long-term marketing strategy built around our Marcellus Shale assets in southwest Pennsylvania, and 2018 was the first year we were able to fully access and utilize all of those marketing opportunities. During the year, Range gained access to Columbia's Leach and Rayne Xpress projects, Energy Transfer's Rover project and the MarkWest Harmon Creek processing plant. This infrastructure allows Range to sell production into additional domestic markets, including the Midwest and Gulf Coast, as well as international markets in Canada and Europe. Although they seem to have been a long time in the making, our infrastructure arrangements aligned with Range's production profile. Over the past several years, we reduced our production trajectory and corresponding capital spend, but were still able to fully utilize each firm transport project shortly after its in-service date. Range's strategy of creating a diversified market portfolio, inclusive of in-basin exposure, has been key in optimizing realized pricing while managing our cost structure. Now that the infrastructure is in place and fully utilized, Range has flexibility in setting its capital spending at a level that balances financial objectives with operational efficiencies.

On the strategic front, the Company executed on two divestitures during the year, and in both cases the net proceeds were used to reduce debt and leverage. First, consistent with our track record of portfolio high-grading, Range sold Midcontinent properties for $23 million, consisting of approximately 11 Mmcfe per day of production and annualized cash flow of approximately $3 million. Second, Range sold a proportionately reduced 1% overriding royalty in our Washington County, Pennsylvania leases for gross proceeds of $300 million. We think this royalty transaction highlights the quality and value of Range's inventory and represents a realization of a portion of that embedded value. The transition to free cash flow mid-year 2018, combined with execution on asset sales, allowed Range to reduce absolute debt and reduce our Debt/EBITDAX leverage ratio from 3.7x at year-end 2017 to 3.1x at year-end 2018. Going forward, Range will continue to pursue asset sales to bring forward inventory value, high-grade the portfolio and strengthen our financial position.

## Updated Outlook

As we look forward to 2019 and beyond, the framework through which we allocate capital is paramount in understanding the near- and long-term value that Range can generate. As described last year, borne out in our results, and reiterated this year, our focus is on creating economic value. In conjunction with Range's year-end 2018 earnings, we released an update to the prior five-year outlook that, at a high level, encompassed one meaningful change—an acceleration of free cash flow generation through a moderated growth profile.

<--- Page Split --->

Just as the Marcellus has evolved from a concept in 2004 into North America's largest natural gas field, we, too, have recognized the need to evolve—both as an industry and as a company. Range's strategy and updated outlook have adapted to market dynamics year-over-year in an effort to increase shareholder value. In the Marcellus, we are now beyond the fast-paced land acquisition, asset evaluation, and growth for size and scale. Range achieved a few key milestones in 2018, including the aforementioned infrastructure projects coming into service, as well the start of free cash flow generation. Other aspects of the outlook remain very similar or improved. Cumulative projected free cash flow increases to approximately $1.2 billion at the end of five years, both debt and leverage are meaningfully reduced, and Range's cost structure improves by an estimated $0.30 per mcf, or 14%, compared to the fourth quarter of 2018.

For 2019, we developed a plan focused on balancing the goals of generating meaningful free cash flow at strip pricing, reducing absolute debt, maintaining capital efficiency, managing leverage, and efficiently utilizing existing infrastructure. We do not have acreage at risk of expiring, a midstream affiliate, excess transportation agreements, or other forces that would drive us to favor outsized growth over free cash flow. In balancing these objectives to maximize value from the 2019 capital program, we developed a \(756 million capital plan that is focused and efficient—with ~90% of capital going towards the Marcellus and ~90% of capital going towards drilling and completions. This budget is 20% or \)185 million lower than the 2018 budget, generates free cash flow, reduces debt, maintains capital efficiency, enhances margins, and results in an estimated 6% production growth.

We strongly believe that we have the best natural gas assets in North America, especially when you consider five important factors: quality, quantity, infrastructure, liquids optionality, and stacked pay. Range is focused on translating our incredible inventory into shareholder value. We had another solid year of reserve additions, with drill-bit finding costs of only \(0.22 per mcf. We enhanced the quality of our reserves with another consecutive year of positive performance revisions, which were a result of extending latalers and improvements from optimized targeting and completions. Future development costs for proven undeveloped locations are expected to be approximately \)0.40 per mcf, which is outstanding and underpins a strong unhedged recycle ratio at current strip pricing. Going forward, Range is committed to translating well-level returns from our high-quality asset base into corporate-level returns, including a free cash flow yield that is competitive not only within energy, but across the broader market.
We had many achievements and met many milestones in 2018, none of which would be possible without our company's most valuable resource—our talented and dedicated employees. They continue to find new creative ways to engineer and produce more efficient wells, while doing it safely. Our commitment to safety, environmental protection, and efficient operations all starts with the individuals we have on the Range team.

Range also experienced success away from the well sites in 2018. We are proud to say that Range received several recognitions, including the "Best Place to Work in Washington County, PA" and earned the Washington County Community Foundation's "Charles C. Keller for Corporate Philanthropy" award for our community activities and involvement. These recognitions are attributed to the people we employ and the quality of relationships that we have built in the communities in which we operate. There were two specific efforts our employees launched in 2018 that we'd like to highlight. First, Range created a \(50,000 STEM scholarship program for Washington County students, which provides dollars for each school in our core operating area for enhanced STEM projects that may not be in a teacher's normal budget. This program allows the students to come in, interact with and present to our employees, with the hopes of inspiring the next wave of STEM professionals. The other program we were excited to launch this year was the "Good Neighbors Fund" with the Washington County Community Foundation. This \)75,000 fund was created to support dozens of fire departments and emergency management services organizations in our communities.

In summary, we remain focused on converting consistently efficient operations on top-tier acreage into tangible shareholder returns through the application of a disciplined capital allocation framework. We believe our 2019 plan and five-year outlook demonstrate that focus, highlight our asset quality, and prove our ability and commitment to deliver sustained and meaningful free cash flow.

We want to thank our Board of Directors for their leadership, guidance, and commitment to long-term value creation for shareholders. Most importantly we thank you, our loyal shareholders, for your continued support.

![](images/2_0.jpg)

Jeffrey L. Ventura
Chief Executive Officer
& President

Greg G. Maxwell
Chairman

<--- Page Split --->

![](images/3_0.jpg)