2018 Annual Report 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 including the Midwest and Gulf Coast, as well as international was a difficult year for Range, as well as the industry. On markets in Canada and Europe. Although they seem to have average, Range’s stock, and the stocks of our SW Appalachia been a long time in the making, our infrastructure arrangements peers and our 16-company peer group, were all down aligned with Range’s production profile. Over the past several approximately 40% in 2018. We are taking steps to improve years, we reduced our production trajectory and corresponding Range’s performance in 2019 and beyond, and we believe that capital spend, but were still able to fully utilize each firm transport generating free cash flow while moderately growing production project shortly after its in-service date. Range’s strategy of can only be achieved by a few companies at the current forward creating a diversified market portfolio, inclusive of in-basin price curve. Range, being one of those companies, has the exposure, has been key in optimizing realized pricing while opportunity to capitalize on its high-quality assets in an managing our cost structure. Now that the infrastructure is in environment of capital discipline. Combined with our anticipated place and fully utilized, Range has flexibility in setting its capital debt reduction and achieving operational targets, we believe spending at a level that balances financial objectives with this should translate into a better-performing share price operational efficiencies. throughout the year. On the strategic front, the Company executed on two divestitures Range’s capital spending was $910 million in 2018, $31 million during the year, and in both cases the net proceeds were used under budget for the year, while we grew production approximately to reduce debt and leverage. First, consistent with our track 10% year-over-year to a record 2,201 Mmcfe per day. A key record of portfolio high-grading, Range sold Midcontinent theme for Range in 2018 was our ability to drill long laterals in properties for $23 million, consisting of approximately 11 Mmcfe the Marcellus, resulting in a lower cost per foot. During the year, per day of production and annualized cash flow of approximately Range drilled wells with laterals averaging 10,300 feet, an $3 million. Second, Range sold a proportionately reduced 1% increase of 8% compared to 2017. We also increased footage overriding royalty in our Washington County, Pennsylvania drilled per rig by 20% and, with these efficiency gains, reduced leases for gross proceeds of $300 million. We think this royalty the drilling cost per foot by as much 30%. Water recycling also transaction highlights the quality and value of Range’s inventory played a significant role in our program during the year. By and represents a realization of a portion of that embedded recycling 100% of Range’s water in southwest Pennsylvania value. The transition to free cash flow mid-year 2018, combined and taking water from nearby third parties, we not only minimized with execution on asset sales, allowed Range to reduce absolute our environmental footprint, but realized significant capital debt and reduce our Debt/EBITDAX leverage ratio from 3.7x savings that contributed to the annual underspend. We think at year-end 2017 to 3.1x at year-end 2018. Going forward, capital discipline means executing on the capital plans that are Range will continue to pursue asset sales to bring forward communicated to investors at the beginning of the year. In 2018, inventory value, high-grade the portfolio and strengthen our Range accomplished this and more, all while continuing our financial position. commitment to efficient and safe operations. This continued Updated Outlook focus on disciplined spending and safety is what you can expect As we look forward to 2019 and beyond, the framework through from Range in 2019 and beyond. which we allocate capital is paramount in understanding the For years our team has been developing a long-term marketing near- and long-term value that Range can generate. As strategy built around our Marcellus Shale assets in southwest described last year, borne out in our results, and reiterated Pennsylvania, and 2018 was the first year we were able to fully this year, our focus is on creating economic value. In conjunction access and utilize all of those marketing opportunities. During with Range’s year-end 2018 earnings, we released an update the year, Range gained access to Columbia’s Leach and Rayne to the prior five-year outlook that, at a high level, encompassed Xpress projects, Energy Transfer’s Rover project and the one meaningful change — an acceleration of free cash flow MarkWest Harmon Creek processing plant. This infrastructure generation through a moderated growth profile. allows Range to sell production into additional domestic markets, Just as the Marcellus has evolved from a concept in 2004 into We had many achievements and met many milestones in 2018, North America’s largest natural gas field, we, too, have none of which would be possible without our company’s most recognized the need to evolve — both as an industry and as a valuable resource — our talented and dedicated employees. company. Range’s strategy and updated outlook have adapted They continue to find new creative ways to engineer and produce to market dynamics year-over-year in an effort to increase more efficient wells, while doing it safely. Our commitment to shareholder value. In the Marcellus, we are now beyond the safety, environmental protection, and efficient operations all fast-paced land acquisition, asset evaluation, and growth for starts with the individuals we have on the Range team. size and scale. Range achieved a few key milestones in 2018, Range also experienced success away from the well sites in including the aforementioned infrastructure projects coming 2018. We are proud to say that Range received several into service, as well the start of free cash flow generation. Other recognitions, including the “Best Place to Work in Washington aspects of the outlook remain very similar or improved. County, PA” and earned the Washington County Community Cumulative projected free cash flow increases to approximately Foundation’s “Charles C. Keller for Corporate Philanthropy” $1.2 billion at the end of five years, both debt and leverage award for our community activities and involvement. These are meaningfully reduced, and Range’s cost structure improves recognitions are attributed to the people we employ and the by an estimated $0.30 per mcfe, or 14%, compared to the quality of relationships that we have built in the communities fourth quarter of 2018. in which we operate. There were two specific efforts our For 2019, we developed a plan focused on balancing the goals employees launched in 2018 that we’d like to highlight. First, of generating meaningful free cash flow at strip pricing, reducing Range created a $50,000 STEM scholarship program for absolute debt, maintaining capital efficiency, managing leverage, Washington County students, which provides dollars for each and efficiently utilizing existing infrastructure. We do not have school in our core operating area for enhanced STEM projects acreage at risk of expiring, a midstream affiliate, excess that may not be in a teacher’s normal budget. This program transportation agreements, or other forces that would drive allows the students to come in, interact with and present to our us to favor outsized growth over free cash flow. In balancing employees, with the hopes of inspiring the next wave of STEM these objectives to maximize value from the 2019 capital professionals. The other program we were excited to launch program, we developed a $756 million capital plan that is this year was the “Good Neighbors Fund” with the Washington focused and efficient — with ~90% of capital going towards County Community Foundation. This $75,000 fund was created the Marcellus and ~90% of capital going towards drilling and to support dozens of fire departments and emergency completions. This budget is 20% or $185 million lower than management services organizations in our communities. the 2018 budget, generates free cash flow, reduces debt, In summary, we remain focused on converting consistently maintains capital efficiency, enhances margins, and results in efficient operations on top-tier acreage into tangible shareholder an estimated 6% production growth. returns through the application of a disciplined capital allocation We strongly believe that we have the best natural gas assets framework. We believe our 2019 plan and five-year outlook in North America, especially when you consider five important demonstrate that focus, highlight our asset quality, and prove factors: quality, quantity, infrastructure, liquids optionality, and our ability and commitment to deliver sustained and meaningful stacked pay. Range is focused on translating our incredible free cash flow. inventory into shareholder value. We had another solid year of We want to thank our Board of Directors for their leadership, reserve additions, with drill-bit finding costs of only $0.22 per guidance, and commitment to long-term value creation for mcfe. We enhanced the quality of our reserves with another shareholders. Most importantly we thank you, our loyal consecutive year of positive performance revisions, which were shareholders, for your continued support. a result of extending laterals and improvements from optimized targeting and completions. Future development costs for proven undeveloped locations are expected to be approximately $0.40 per mcfe, 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 Jeffrey L. Ventura Greg G. Maxwell high-quality asset base into corporate-level returns, including Chief Executive Officer Chairman a free cash flow yield that is competitive not only within energy, & President but across the broader market. Corporate Sustainability
For decades, Range Resources has proudly focused on safely delivering energy, while also providing value to our partners and shareholders. Our commitment to corporate responsibility guides our work each day, influencing every aspect of our operations from the boardroom to the well pad.
We are incredibly proud of the progress we’ve made towards We continue to leverage new, innovative practices to further our sustainability goals, with pioneering achievements that maximize the opportunities natural gas provides to our economy have helped shape new standards for shale development. and our environment. We have made, and continue to make, Range has been at the forefront of many industry-leading important and measurable progress in advancing our best practices, and we are constantly working to make sustainability goals over the years through the implementation our operations better, safer, and more efficient. To that end, of environmentally-focused programs and processes that we saw an important opportunity to advance those efforts support the improved production of clean-burning natural gas. and highlight our many achievements in a 2018 Corporate 2018 Key Sustainability Goals and Achievements Sustainability Report. • Set new corporate goal for emissions reduction A significant focus for Range has been our commitment to being an industry leader in emission reductions, utilizing cutting-edge • Committed to performing a 2-degree scenario analysis technologies and customized engineering solutions. This effort • Achieved a recycled water rate of 152% through our “water not only enables us to effectively manage emissions, but also sharing program” helps to improve overall production. Range has been a leader • Scored in the top tier of our peers by As You Sow’s 2018 in this effort, with unique practices ranging from a robust leak “Disclosing the Facts” report detection and repair program to a continual upgrade of engineered production facilities — all with the goal of achieving zero • Reduced surface use by returning to existing locations, and emissions across our operations. drilling longer laterals
While we’re proud of these important accomplishments, we • Survey all wells twice per year through our robust leak recognize the importance of continuing to raise the bar at detection and repair program every opportunity. We fully appreciate the heightened focus • Created Habitat Enhancement Program for conservation and critical priorities among stakeholders to continuously efforts during reclamation projects challenge ourselves to be better in all aspects of our • Developed program to perform mechanical integrity operations. We are a part of these communities, and we hold assessments on all Pennsylvania wells four times a year our responsibility to safely produce sustainable natural gas in the highest regard. Corporate Information
Board of Directors Senior Management
BRENDA A. CLINE 1,4 Executive Vice President, Chief Financial JEFFREY L. VENTURA Chief Executive Officer & President Officer, Treasurer & Secretary of Kimball Art Foundation MARK S. SCUCCHI Senior Vice President – Chief Financial Officer ANTHONY V. DUB 1,2 Chairman, Indigo Capital, LLC
DENNIS L. DEGNER Senior Vice President – Operations JAMES M. FUNK 2,4 President, J.M. Funk & Associates, past President of Shell Oil Co. and Equitable ALAN W. FARQUHARSON Senior Vice President – Reservoir Production Co. Engineering & Economics
CHRISTOPHER A. HELMS 2 Founder and CEO, US Shale Energy DORI A. GINN Senior Vice President – Controller Advisors LLC, past Executive Vice & Principal Accounting Officer President & Group CEO, NiSource, Inc.
DAVID P. POOLE Senior Vice President – General STEVE D. GRAY 2 Founder, past director and CEO of Counsel & Corporate Secretary RSP Permian Inc.
K. SCOTT ROY Senior Vice President GREG G. MAXWELL 1,3 Chairman, Range Resources Corporation, past EVP, Finance & CFO of Phillips 66
STEFFEN E. PALKO 2 Associate Professor – Texas Christian University, Co-founder, past President and Vice-Chairman of XTO Energy, Inc.
JEFFREY L. VENTURA 3 Chief Executive Officer & President, Range Resources Corporation
Board Committee Membership: 1 Audit, 2 Compensation, 3 Dividend, 4 Governance and Nominating
Form 10-K Transfer Agent
Additional printed copies of the Company’s Annual Report on Form 10-K For assistance regarding a change of address or concerning your stock filed with the Securities and Exchange Commission may be obtained upon account, please contact: request from Investor Relations at our headquarters’ address.
COMPUTERSHARE, INC. Inquiries about the Company should be directed to: P.O. BOX 30170 COLLEGE STATION, TX 77842-3170 877-581-5548 INVESTOR RELATIONS HTTPS://WWW-US.COMPUTERSHARE.COM/INVESTOR/CONTACT RANGE RESOURCES CORPORATION 100 THROCKMORTON ST., SUITE 1200 FORT WORTH, TX 76102 Use our web site to obtain the latest news releases and SEC filings: 817-870-2601 WWW.RANGERESOURCES.COM 817-869-9166 (FAX)
In addition to historical information, this report contains forward-looking statements that may vary materially from actual results. Factors that could cause actual results to differ are included in the Company’s Form 10-K for the year ended December 31, 2018, which has been filed with the Securities and Exchange Commission. Form 10-K 81,7('67$7(6 6(&85,7,(6$1'(;&+$1*(&200,66,21 :$6+,1*721'& )250. 0DUNRQH _ $118$/5(325738568$17726(&7,2125 G 2)7+(6(&85,7,(6(;&+$1*($&72) )RUWKHILVFDO\HDUHQGHG'HFHPEHU 25 75$16,7,215(325738568$17726(&7,2125 G 2)7+(6(&85,7,(6(;&+$1*($&72) )RUWKHWUDQVLWLRQSHULRGIURPWR &RPPLVVLRQ)LOH1XPEHU
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Unless otherwise noted, all information in the report relating to natural gas, natural gas liquids and oil reserves and the estimated future net cash flows attributable to those reserves are based on estimates and are net to our interest. If you are not familiar with the oil and gas terms used in this report, please refer to the explanation of such terms under the caption “Glossary of Certain Defined Terms” at the end of Items 1 & 2. 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