Authorization for Expenditure (AFE)
An itemized cost estimate for drilling or completing a well, sent to working-interest owners so they can elect to participate or not.
An authorization for expenditure, or AFE, is the itemized budget the operator circulates before a major operation — typically drilling, completing, or reworking a well. It breaks down estimated costs by category (location and roads, drilling, casing, completion, facilities) so each working interest owner can see the projected price tag for its share before any money is spent.
The AFE is also the election document. Under the joint operating agreement, non-operators sign and return the AFE to elect in — committing to pay their proportionate share — or decline and face the agreement's non-consent (often called "penalty" or "going non-consent") provisions. An AFE is an estimate, not a cap; actual costs can run over.
Royalty owners do not receive AFEs because they bear no costs. They matter to anyone holding working interest, where the elected share later shows up on joint interest billing.