AFE Management

The beginning of most well oriented projects begins with an AFE in an AFE Group or Budget Group within a company. AFEs are designed to quantify and manage the costs required to exploit value through drilling, completion, remedial, or additional equipment placed in the production stream. The beauty of working with Operations Center is that AFE planning and budget control are made very effective through the AFE system within theDrilling and Wellwork. By taking careful forethought in the implementation and planning stages of a budgeted effort within a company, AFEs can provide the basis of tracking estimated costs against the individual AFE and reference as to the actual expenses against an overall budget in an area. The key to setting up budget areas is to involve the management in their view of the activities of the company and how they might like to set up budgets that pertain to certain goals or efforts. Taking some time each fiscal year to conduct a review of the budget setups will prove very beneficial to the cost tracking that can be conducted within companies.

Another key to setting up an overall AFE plan is to have a very detailed review and planning meeting over the company’s chart of accounts. The benefit of working with Operations Center is that the chart of accounts area for AFEs and LOE system are designed to be compatible with the accounting/financial system of the company.

Several key people need to be involved in the implementation of the AFE system because it involves financial data from many disciplines within the company as efforts are budgeted and tracked. To begin planning, be sure to gather key people from the following disciplines within the company.

• Accounting manager
• Operations manager & engineers
• Drilling manager & engineers
• Completion manager & engineers
• Technicians – operations
• Landman
• Geologists

Each of these disciplines should agree on the content of the chart of accounts and insure that all parties involved with the chart of accounts are on the same page for recording estimated costs and planning.