Definition - What does Afe Number mean?
AFE Number refers to authority for expenditures. It is crucial step for well planning as it prepares the cost estimates for a well and get approved from the management in the form of AFE. It might be a difficult process as it requires accurate cost estimate including dry holes and completed wells. The cost estimates depend on the technical aspects of the projected well. The AFE number can include hyphens, asterisks, slashes, decimal points, letters and numbers.
Petropedia explains Afe Number
The oil and gas industry is encountering a consistent issue while facing the AFE. It defines the mechanism defined particularly in a joint venture environment to ensure budget control in the industry. There are a variety of factors that can influence the AFE number such as:
- Drilling rig and tools
- Cementing services
- Types of transportation used
- Equipment used for wellhead and completion
- Projected drilling time
During accounting principles, tangible and intangible costs are catered in different ways. The intangible costs include costs for labor, repairs or hauling whereas tangible costs include installation of production facilities, casing and cost required for installation of oil pumps.