Authorization For Expenditure - "AFE"
What this document covers
The Authorization for Expenditure (AFE) is a formal document used to obtain approval for costs and expenses related to drilling and completion activities in the oil and gas industry. This form outlines the estimated costs associated with well operations and serves as a basis for budget approval. Unlike other financial forms, the AFE provides a detailed breakdown of both tangible and intangible costs, ensuring transparency and accountability in expense management.
Main sections of this form
- AFE Number and Authorization Information
- Detailed Breakdown of Well Costs
- Tangible and Intangible Drilling Costs
- Completion Costs, both Tangible and Intangible
- Surface Equipment Costs
- Summary of Estimated Costs and Company Share
Situations where this form applies
This form should be used when a company needs to request financial approval for drilling or completion operations in the oil and gas sector. It is particularly relevant during the planning phase of well development, sanitation of existing wells, or any time new expenditures related to well activities are incurred. The AFE also aids in securing investments by providing a comprehensive cost overview.
Who needs this form
- Oil and gas companies planning new drilling projects
- Project managers overseeing well completion activities
- Financial analysts conducting budget reviews in the energy sector
- Contractors and service providers involved in drilling and completion
Steps to complete this form
- Enter the AFE number and authorization information at the top of the form.
- Provide details about the well, including company name, lease name, location, and estimated depth.
- List estimated costs for drilling, including tangible and intangible expenses, ensuring accuracy in pricing.
- Include completion costs, providing a breakdown similar to the drilling section.
- Summarize the total costs and specify the company's share of expenses that will be booked.
Notarization requirements for this form
In most cases, this form does not require notarization. However, some jurisdictions or signing circumstances might. US Legal Forms offers online notarization powered by Notarize, accessible 24/7 for a quick, remote process.
Common mistakes to avoid
- Inaccurate cost estimations that do not reflect actual or projected expenses.
- Failing to clearly distinguish between tangible and intangible costs.
- Neglecting to update the form with changes in budget or project scope.
- Not securing necessary approvals before proceeding with expenditures.
Benefits of completing this form online
- Easy access to customizable templates that save time.
- Quick editing capabilities to accommodate changes in project plans.
- Secure online storage and retrieval of important financial documents.
Legal use & context
- The AFE document serves as a binding agreement once approved by relevant parties.
- It provides legal protection for all parties by detailing expenses and authorizations.
- An approved AFE represents a commitment of resources and funds towards project completion.
Quick recap
- The Authorization for Expenditure is essential for managing costs in drilling projects.
- It is vital to provide accurate and detailed cost estimates.
- Using this form can facilitate smoother budgeting and financial planning.
