If you hold a working interest, an AFE (an authorization for expenditure) is one of the few documents that can cost you money rather than pay you. It is the operator telling the non-operating owners: here is what we propose to spend, here is your share, decide.
What an AFE is
An AFE is a cost estimate for a specific operation: drilling and completing a new well, a workover, a recompletion, plugging and abandonment. It lists the estimated cost by category (intangible drilling costs, tangible equipment, completion) and totals it.
Your share of that total is the AFE amount multiplied by your working-interest decimal. That is the capital you are being asked to commit. Unlike a revenue decimal, a working-interest decimal carries cost as well as income.
What happens when you sign, or don't
Signing an AFE generally means you agree to pay your share as the costs are incurred, billed to you afterward on joint-interest bills. The AFE is an estimate; the JIBs are the actual.
Declining to participate is where it gets serious. Most joint operating agreements contain a non-consent penalty: an owner who does not fund an operation is 'carried' but gives up a multiple of their share of revenue from that well until the consenting owners have recovered a penalty, often several hundred percent of the non-consenting owner's share of costs. Non-consent is sometimes the right call, but it is a real economic decision, not a way to avoid one.
How to read an AFE before you sign
Check the cost against comparable wells. An AFE for a well far above the cost of similar nearby wells deserves a question.
Confirm your decimal. The AFE should apply the same working-interest decimal you are paid revenue on, unless something has genuinely changed.
Think about the well's economics, not just the cost. The question is not only 'is this cost reasonable' but 'will this well, at this cost, earn its capital back.' That requires a forecast of what the well will produce.
Turning AFEs into a decision
An AFE in isolation is hard to judge. Strata Vantage places it in context: your net exposure at your decimal, the cost benchmarked against comparable wells, and a forecast of what the well is likely to return. An AFE becomes a decision you can actually make, instead of a deadline you guess at.
See it on your own documents.
Strata Vantage turns the paperwork you already receive into clear reporting. Free for owners during early access.