# DEAR FELLOW
SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/NYSE_AR_2018/NYSE_AR_2018.mmd` · pages 2-8_

---

DEAR FELLOW
SHAREHOLDERS,

Antero Resources (NYSE: AR) made significant achievements during 2018, further solidifying the Company's leadership position in the Appalachian Basin. Driven by the successful execution of our development plan, we surpassed 3.0 Bcfe/d of net production during the year while growing average production by 20% over the previous year. Further, our liquids volumes averaged 162,000 Bbl/d during the fourth quarter of 2018. This achievement marked Antero as the largest natural gas liquids ("NGL") producer in the United States. Antero Resources also exited 2018 as the fourth largest natural gas producer in the U.S. with 2.2 Bcf/d of average dry gas production in the fourth quarter. We grew our proved reserves by 4% to 18.0 Tcfe, including a 22% increase in proved developed reserves.

![](images/2_0.jpg)

Our operating and financial successes during 2018 allowed us to return substantial capital to shareholders by repurchasing $129 million of our common shares. Looking ahead, our development plan targets capital spending within cash flow while continuing to deliver attractive growth. In 2019, we are expecting production growth in the range of 16% to 20% while maintaining a financial leverage profile in the low 2.0x range. Our significant scale and product diversification provides the flexibility to deliver exceptional results across varying commodity price scenarios. These attributes, in combination with the strongest balance sheet in our Company's history, position Antero Resources to generate significant value for our shareholders on a sustained basis over the coming years.

## EFFICIENT AND VALUE-FOCUSED
SHALE DEVELOPMENT

Antero Resources continued to be one of the most active operators in Appalachia in 2018, running an average of five drilling rigs and turning 163 wells to sales during the year. The 163 well completions had an average lateral length of 10,202 feet. Net production increased by 20% to average 2.7 Bcfe/d during 2018. Our core contiguous acreage position allows for long lateral drilling and highly efficient operations, both upstream and midstream. These efficiencies led to new operational records in 2018. We completed an average of 5.2 stages per day, a 24% increase from 4.2 stages per day in 2017. We continue to focus our development activity on our liquids-rich acreage position, knowing strong liquids pricing provides superior economic returns. Going forward, we expect strong liquids pricing to continue to generate excellent economic returns. At year-end 2018, the capacity at the Sherwood processing complex was increased to 2.2 Bcf/d, including 60,000 Bbl/d of de-ethanization. In 2019, we expect

<--- Page Split --->

Driven by the successful execution
of our development plan, we surpassed
3.0 Bcfe/d of net production during 2018
and grew production by 20%
over the prior year.

18.0 Tcf
Net Proved Reserves

612,000
Net Acres

31%
AM Ownership \( ^{*} \) 

118 MBbl/d
Natural Gas Liquids
Production

 \( ^{*} \) As of March 2019 simplification closing

$0.42 Mcfe
Marcellus F&D Cost

$12.6 Bn
SEC PV-IO Proved Reserve Value

Over
3,000
Undeveloped Drilling Locations

37%
Liquids Revenue
Contribution

<--- Page Split --->

to place two additional 200 MMcf/d processing units into service to further support the growth of our liquids-rich gas production.

## READY FOR THE FUTURE

Our continued success in 2018 reinforces the reputation of Antero Resources as a world-class operator and industry leader in the Appalachian Basin. We enter 2019 with a disciplined development plan focused on investing within cash flow while maintaining an attractive production growth profile. As the largest NGL producer in the United States, Antero is well positioned to capitalize on improving liquids pricing. In early 2019, we gained significant access to global NGL markets and pricing through our commitment on the Mariner East 2 pipeline. This pipeline transports NGL products from our producing areas in West Virginia and Ohio to the Marcus Hook terminal dock on Delaware River near Philadelphia for international shipping. We expect this project will allow us to receive premium NGL export pricing relative to domestic benchmark pricing for a significant portion of our NGL production.

We also continue to deliver pre-hedge natural gas realizations at a premium to benchmark pricing due to our firm transportation portfolio. The start-up of the Rover Pipeline during the fourth quarter of 2018 provides us with increased exposure to premium priced markets in the Midwest. We are also one of the largest suppliers to the growing LNG export business in the U.S. which we deliver through our 2.1 Bcf/d of transportation capacity to the Gulf Coast. Our firm transportation contracts are expected to continue to generate peer-leading realizations and margins for many years to come.

The combination of our diversified product pricing exposure and increasing capital efficiency puts Antero on the path to generating free cash flow in the coming years assuming futures strip pricing. Investors can remain confident in our coordinated development

![](images/4_0.jpg)

![](images/4_1.jpg)

<--- Page Split --->

Our continued success in 2018 reinforces the reputation of Antero Resources as a world-class operator and industry leader in the Appalachian Basin.

<--- Page Split --->

plan with Antero Midstream. This plan provides a low-risk, long-term outlook. Free cash flow generation will lead to continued debt reduction and attractive debt-adjusted production growth rates for the foreseeable future.

## ANTERO MIDSTREAM DEVELOPMENTS

During 2018, we simplified our midstream structure through the merger of Antero Midstream GP LP and Antero Midstream LP. The simplification closed in March 2019, resulting in a top 20 C-Corp midstream entity, Antero Midstream Corporation. As a result of this merger, we will no longer report our financial statements on a consolidated basis. We are excited about these important steps in simplifying our story and believe they offer a significant improvement in our transparency to shareholders.

Following the simplification of the midstream structure, we own 31% of Antero Midstream Corporation's shares. Antero Midstream is an integrated midstream service provider whose primary role is to support the growth of Antero Resources in Appalachia. Through its gathering and compression business, Antero Midstream delivers low-pressure gathering, compression, and high-pressure gathering services to Antero Resources. Antero Midstream also uses its fluid handling assets to manage fresh water delivery for well completions and flowback and produced water services for Antero Resources. The start-up of Antero Midstream's 60,000 Bbl/d Clearwater water treatment facility has positioned Antero Midstream at the forefront of water management and conservation among U.S. shale producers. Further value chain diversification was achieved in 2017 as Antero Midstream announced an $800 million processing and fractionation joint venture with MPLX (NYSE: MPLX). Of the seven Sherwood plants planned for the joint venture, three were brought on line in 2018, bringing a total of five that are currently in service. We anticipate that two additional plants will be placed into service at Sherwood in 2019. One year later, in 2020, we anticipate our first plant at the new and nearby Smithburg facility will be placed in service. The joint venture has been expanded to include all six of the planned processing plants for the Smithburg

AR Realized Hedge Gains ($/Mcf)

AR Realized Natural Gas Price ($/Mcf)

NYMEX Natural Gas Price ($/Mcf)

![](images/6_0.jpg)

CONSISTENTLY DELIVERING ABOVE
BENCHMARK NYMEX NATURAL GAS PRICING

<--- Page Split --->

complex. Additionally, the joint venture elected its option to acquire an additional 20,000 Bbl/d of capacity at the Hopedale fractionation complex, bringing the total fractionation capacity to 40,000 Bbl/d. These assets will continue to contribute to growth and profitability in the coming years. Overall, 2018 was another year of continued growth and value chain buildout for Antero Midstream. The momentum continues into 2019.

## HEALTH, SAFETY AND THE ENVIRONMENT

Antero's commitment to health, safety and the environment is a core value of our organization. A culture dedicated to safety and environmental stewardship reduces risk, enhances productivity, and elevates our reputation in the communities in which we operate. We invest heavily in safety training and coaching of our employees, we promote risk assessments and encourage visible safety leadership and we sponsor emergency preparedness programs. On the environmental front, Antero Resources

![](images/7_0.jpg)

expanded its commitment to evaluating methane reduction opportunities by joining the Environmental Protection Agency's ("EPA") Natural Gas Star Program in 2017 while implementing methane reduction projects and reporting reductions of methane emissions per unit of production to the EPA every year. We also report our yearly greenhouse gas ("GHG") emissions as a rate per production and our methane leak rate. We are proud to state that Antero's GHG emissions intensity dropped in 2018 despite an increase in production. Further, Antero's methane leak rate was only 0.06% in 2016 and 2017, which is well ahead of the EPA's gas production and gathering segment goal of 0.36% and the ONE Future Coalition's target of below 1% by 2025. Thanks to continuous improvement in our safety and environmental performance, Antero is viewed as a safe and environmentally responsible operator.

## 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 challenging 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 2019, and for many years to come.

![](images/7_1.jpg)