What is an AFE number in oil and gas?

Before an operator spends money on a well, it writes up what the job should cost. That document is the AFE. It lists the expected costs, such as rig time, services, equipment, materials and fuel, and adds them up to one approved amount.

Operators write separate AFEs for different stages of work. Common ones are:

• Drilling a new well
• Completing it, which often includes fracking
• Workovers on an existing well
• Building facilities, such as tank batteries or pipelines
• Plugging and abandoning a well

Once the AFE is approved it gets a number, and from then on every cost for that job is charged against that number. That's the AFE number your customer is asking for.

Many wells have more than one owner. The operator runs the work, and partners with a working interest pay their share of the costs. Before the work starts, the partners approve the AFE, or decide whether to take part.

When the bills come in, the operator's accounting team codes each one to an AFE. That's how the cost gets charged to the right well and split among the partners, and how the operator checks spending against what was approved. An invoice with no AFE number, or the wrong one, can't be coded, so it often gets held or sent back.

AFE numbers aren't the only reference. A field ticket or invoice can also carry a purchase order number, a lease or well name, or a cost center. They aren't interchangeable, so ask each customer which ones they want and where.

An AFE is open while the work runs, and costs are coded to it as they come in. If the job is going to cost noticeably more than approved, the operator writes a supplemental AFE and the partners approve the extra. When the work is done, the AFE is closed and final costs are compared with the estimate.

For a vendor, that has two practical results. The same location can move from one AFE to the next as the work changes, for example from drilling to completion to flowback. And an AFE that has closed shouldn't pick up new charges, so the dates matter as much as the place.

Fuel is a hard cost to code. One pad can have several AFEs open at once, a fueler fills dozens of units a shift for several contractors, and the fueler rarely knows which AFE a unit belongs to. A system that works:

1. Get the AFE list from each customer. For each number, find out what it covers: the location, the kind of work or equipment, the contractor and the dates.
2. Keep AFEs off the truck. Let fuelers log what they can see, the unit, the place and the contractor, and do the coding in the office.
3. Code each delivery to one AFE. When two AFEs could both fit, hold the delivery and ask, rather than guess.
4. Total the gallons per AFE. Put the AFE number on each invoice line, and show anything not coded yet so it doesn't slip through.

Fuel Relay does this for you. The office adds the AFE numbers your customers give you, each delivery your fuelers log gets coded to the one AFE that fits it best, and a delivery waits for you whenever two AFEs tie or none matches. Fuelers never see AFEs. It's optional, and part of the free office dashboard. See how AFE coding works.