Range Resources (RRC) Announces 26% Increase in Proved Reserves

RANGE RESOURCES CORPORATION (NYSE: RRC) announced today that proved reserves at December 31, 2017 increased by 26% from the prior-year to 15.3 Tcfe.

Highlights –

• SEC PV10 reserve value increased by 119% to $8.1 billion
• Proved reserves increased by 3.2 Tcfe, or 26%
• Reserve extensions, discoveries and additions were a record 3.5 Tcfe
• Proved developed reserves increased 1.6 Tcfe, or 23%
• Drill-bit finding cost of $0.31 per mcfe
• Future development costs for proved undeveloped reserves are estimated to be $0.38 per mcfe
• Unhedged recycle ratio over 3x based on future development costs of $0.38 per mcfe
• Core undrilled inventory of over 3,800 Marcellus locations, assuming 10,000 foot laterals

Commenting on Range’s 2017 proved reserves, Jeff Ventura, Range’s CEO, said, “Range had another solid year of reserve growth, with impressive drill-bit finding costs of only $0.31 per mcfe. Performance revisions are included, but revisions from increased prices are excluded. Positive performance revisions continued in 2017 as we extended laterals, 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 is outstanding and should improve our top tier unhedged recycle ratio to over 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.”

“Looking forward, we see capital efficiency gains continuing as we drive down normalized well costs with longer laterals and drilling on existing pads, while enhancing recoveries with improved targeting and completions. Similar to previous years, this strong reserve growth reflects high quality acreage, as less than one third of our offset proven undeveloped locations are currently recorded for each horizontal producing well. We believe this will provide consistent SEC reserve growth over time as additional acreage is classified as proven and capital is allocated to offset locations. Our economic resilience is further demonstrated in the year-end PV10 reserve value of $9.5 billion using futures strip pricing from year-end and current sales contracts. With 55% of SEC reserves being proved developed (PD), our PD reserve life and debt per PD reserve ratios remain exceptionally strong.”

During 2017, Range added 3.5 Tcfe of proved reserves through the drill-bit, driven by 3.2 Tcfe from the Company’s Marcellus development. The “extensions, discoveries, and additions” amount excludes 597 Bcfe of Marcellus reserves associated with undrilled locations that now have increased recovery estimates as a result of longer laterals, better lateral targeting and increased frac stages. This improved recovery estimate is included in the “revision” category. The average lateral length for existing proved undeveloped locations increased to approximately 9,000 feet in the 2017 report from 7,162 feet in the 2016 report, while newly added proved undeveloped locations in the Marcellus incorporate an average lateral length of approximately 9,500 feet.

Field level performance increased reserves by 531 Bcfe due primarily to the continued improvement in the well performance of existing Marcellus producing wells. As a result of Range’s continued success in drilling longer laterals, the future development plan has been re-optimized resulting in some previously planned wells not being drilled within five years from their original booking date. Accordingly, Range removed 668 Bcfe of proved undeveloped reserves that now fall outside the SEC mandated five-year development window. The Company expects these proved undeveloped reserves to be added back in future years as field development continues. The wells that remain have longer laterals, greater estimated ultimate recoveries (“EURs”) and lower per foot drilling and completion costs resulting in improved economics. The resulting corporate proved undeveloped development cost of $0.38 per mcfe is a conservative estimate, based on 2017 well costs, EURs and lateral lengths, assuming no future efficiencies. The higher SEC price for 2017 as compared to 2016 resulted in an upward pricing revision in proved reserve volumes of 46 Bcfe.

Year-end 2017 proved reserves by volume were 67% natural gas, 30% natural gas liquids and 3% crude oil and condensate. Proved developed reserves represent 55% of the Company’s reserves. The Company’s Appalachia reserves were audited by Wright & Company, Inc. and North Louisiana reserves were audited by Netherland, Sewell & Associates, Inc. The audited reserve value estimates for each area were within 3% of aggregate estimates prepared by Range’s petroleum engineering staff.

2017 SEC and Strip Pricing:

Core Drilling Inventory

Range has an extensive stacked-pay acreage position in both Appalachia and North Louisiana. Range also has a network of over 200 existing well pads. These pads are designed to accommodate an average of 20 wells from any combination of the Marcellus, Utica or Upper Devonian horizons. However, most pads currently contain only 4-6 producing wells, providing Range the opportunity to drill thousands of future wells utilizing existing roads, pads and infrastructure.

The table below reflects Range’s estimate of the remaining core drilling inventory for the Marcellus and Lower Cotton Valley. The total inventory count is based on thousands of historical producing wells and a vast collection of geological information that support the Company’s estimates. Please see slide 7 in the Company’s updated presentation for additional detail on Range’s Marcellus inventory.

Estimated Future Core Drilling Locations - December 31, 2017(Excludes Deep Utica and Upper Devonian Locations)

Fourth Quarter Production

Company production in fourth quarter 2017 is expected to be 2.17 Bcfe per day, level with previous guidance. Marcellus production is expected to be 1.80 Bcfe per day, approximately 27% higher than a year ago, driven by continued outstanding results in the Marcellus, particularly in the Company’s super-rich area. North Louisiana volume is expected to be 350 Mmcfe per day for fourth quarter 2017. The North Louisiana division saw productivity improvements in the fourth quarter well results compared to the first half of 2017 as a result of larger, higher cost completions; however the initial results are coming in below the Company’s 2017 production type curves. Updated type curves for Range’s 2018 drilling program are provided in the Company’s updated presentation. Disclosure Statements:

Certain selected financial information in this release is unaudited. Audited financial results will be provided in our Annual Report on Form 10-K for the year ended December 31, 2017, which we plan to file with the Securities and Exchange Commission (SEC) on February 27, 2018.

Finding and development (F&D) cost per unit is a non-GAAP metric used in the exploration and production industry by companies, investors and analysts. The calculations presented by the Company are based on estimated and unaudited costs incurred excluding asset retirement obligations, gas gathering facilities and non-cash stock-based compensation and divided by proved reserve additions (extensions, discoveries and additions shown in the table) adjusted for the changes in proved reserves for performance, price and deferral revisions or excluding certain costs such as acreage and acquisitions as stated in each instance in the release. Drill-bit development cost per mcfe is based on estimated and unaudited drilling, development and exploration costs incurred divided by the reserve extensions, discoveries and additions with the inclusion of any revisions as specified in the stated measurement. These calculations do not include the future development costs required for the development of proved undeveloped reserves. The SEC method of computing finding costs contains additional cost components and results in a higher number. A reconciliation of the two methods will be shown on the Company’s website at www.rangeresources.com after filing its 2017 Form 10-K.

F&D cost per unit as a statistical indicator can have limitations, including its predictive and comparative value. As an annual measure, F&D cost per unit does not consider the cost or timing of future production of new reserves, and therefore may not be an accurate predictor of future value creation. In addition, it may not be comparable to similarly titled measurements used by other companies.

Year-end pre-tax discounted present value is considered a non-GAAP financial measure as defined by the SEC. We believe that the presentation of pre-tax discounted present value is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves prior to taking into account future corporate income taxes and our current tax structure. We further believe investors and creditors use pre-tax discounted present value as a basis for comparison of the relative size and value of our reserves as compared with other companies. Range's pre-tax discounted present value as of December 31, 2017 may be reconciled to the GAAP financial measure of its standardized measure of discounted future net cash flows as of December 31, 2017 by reducing Range's pre-tax discounted present value by the discounted future income taxes associated with such reserves. This reconciliation will be included in the Company’s 2017 Form 10-K.

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