20 Steps to Start a Drilling Oil and Gas Wells Business
Starting a drilling oil and gas wells business means entering one of the most capital-intensive and technically demanding sectors in the energy industry. This guide walks you through every stage—from forming your company and securing equipment to landing your first drilling contract—using the language you'd actually type into a search bar.
## How to start an oilfield services business
Oilfield services is the work that keeps wells drilling and producing: rigging, cementing, wireline, pressure pumping, well testing, equipment hauling, and the hundred support jobs around a pad. If you already run a crew, own a rig-up truck, or hire out to operators, you are already in oilfield services. This guide takes you from the first sale to a written plan, one step at a time, on your phone.
Most people who read this arrive already earning. You may have taken cash for a rig-up, run a swab job for a neighbor's lease, or hauled tanks all last season. That is a real business. The paperwork catches up to the work, not the other way round. Find where you are on the map above and start there — you do not have to begin at step one.
### Phase 1 — Prove
Before any of this, decide you are running a business, not just picking up work when someone calls. The difference is that you go looking for the next job instead of waiting for it. Oilfield work is hard, cyclical, and pays well when the rigs are running. This week, say it out loud to one person who will hold you to it, and write one sentence: "I do ___ for oil and gas operators." That sentence is the seed of everything else in this guide. Everything downstream — the truck, the crew, the insurance — serves that one decision. Make it now, on purpose, and the rest becomes a to-do list instead of a wish.
Pick one service and be able to say it in a breath. Not "oilfield services" — that is a category, not an offer. Say "I run wireline for completions," or "I haul and set frac tanks," or "I do casing crews for drilling rigs." Operators buy specific work from specific specialists. The narrower your offer, the easier it is to price, to sell, and to get good at. This week, write down the single job you would take today if the phone rang, using the exact words a company man would use on location. If you can do three things, list them, then circle the one you are best and fastest at. Lead with that one.
A drilling oil and gas wells business sells its services to a specific and relatively concentrated set of customers. The primary buyers are oil and gas extraction companies—the operators who hold the mineral rights or leases and need a contractor to physically drill the wells they have permitted and planned. These range from large integrated producers to small independent operators. A second customer category is stone and aggregate quarrying operations (NAICS 1422 adjacent), which occasionally require drilling services for blasting-hole preparation and dewatering wells at quarry sites. Industrial machinery wholesalers Industrial Machinery and Equipment Wholesalers are not direct buyers of drilling services but serve as an important market-facing connection, sometimes coordinating equipment and service packages between contractors and end-use operators. Your sales process will concentrate heavily on the extraction side, where long-term drilling contracts and turnkey well agreements are the standard commercial relationship.
Get one operator or one bigger servicecompany to pay you for the thing you named. One real job beats a month of planning. Call someone you already know from a location — a company man, a tool pusher, a dispatcher at a service firm — and tell them plainly what you run and that you are available. Ask what they need next hitch. If they hand you a small job or a sub for their crew, take it, do it clean, and get paid. This week, make five of those calls. A single yes tells you the work is real, the price holds, and people will pay you — which is worth more than any assumption.
### Phase 2 — Legalise
If you are already running jobs and taking payment, you are operating as a sole proprietor by default — that is legal, and you have done nothing wrong. The question now is whether that still fits. In oilfield work, one bad day on a rig can mean a big liability claim, so most people move to a limited liability company or a corporation to keep the business separate from their house and truck. This week, read a plain-language comparison of sole proprietor, LLC, and corporation for your state, and decide which one matches your risk and how many people you work with. Write down your choice. The next step turns it real.
Now file the thing you chose. If you picked an LLC or corporation, you register it with your state's business filing office, usually the Secretary of State. This is the step that turns "me and my truck" into a business that can sign master service agreements, carry insurance in its own name, and get onto operator vendor lists — the things that let you bid bigger work. If you have been earning cash under your own name, this is simply the paperwork catching up; nobody penalizes you for formalizing. This week, go to your state filing office's website, reserve your business name, and start the registration. Keep the confirmation — you will need it repeatedly.
With the entity filed, get its federal Employer Identification Number from the IRS — it is free, online, and takes minutes. The EIN is how the business files taxes, opens a bank account, and pays crew without using your personal Social Security number. Then handle state and local registration: many states require a separate tax or employer registration, and some counties want a local business registration on top. This week, apply for the EIN, then check your state department of revenue and your county clerk for what they require of a business at your address. Write each registration number in one place. These numbers get asked for constantly when you onboard with operators.
A drilling oil and gas wells business falls into a lower general-risk regulatory tier, but that designation describes business formation complexity, not field operations. At minimum, you will need a standard business entity registration with your state, a federal employer identification number, and general business licenses required of any contractor. Beyond those baseline registrations, well-site operations layer on environmental permits, land-use authorizations, and worker-safety compliance managed at both state and federal levels. The issuing bodies are typically your state's oil and gas conservation commission, the relevant federal land management agency if working on public land, and occupational safety regulators. Confirm every required authorization with those bodies before you drill a single foot.
### Phase 3 — Equip
Open a bank account in the business's name using your EIN and your filing paperwork. This is the single cleanest thing you can do to separate business money from personal money. When operator payments and your fuel, parts, and payroll all run through one business account, your bookkeeping does itself and your entity actually protects you — mixing funds is how people lose that protection. This week, take your EIN letter and formation documents to a bank or credit union and open a checking account. Ask about a business card and a line of credit, because oilfield work often means paying for fuel and consumables before an operator pays you on their terms.
The first money in a drilling oil and gas wells business goes to the largest cost categories in roughly this order: acquiring or leasing a drilling rig (the single biggest line item), transportation and mobilization equipment to move that rig between sites, downhole tools and drill string components, and an initial supply of drilling fluids and cementing materials. After equipment, early capital covers liability and equipment insurance (non-negotiable before any operator will hire you), legal fees for entity formation and contract review, and working capital to cover payroll and consumables during the gap between job completion and invoice payment. Costs vary enormously depending on the rig class—a shallow-formation land rig and a deep-formation directional rig operate in entirely different financial ranges—so build your budget around the specific well depths and formations you plan to target.
Oilfield services carries real risk, and operators will not let you on location without proof of coverage. Expect to need general liability, commercial auto for your trucks, workers' compensation once you have crew, and often specialized coverage for the kind of downhole or pressure work you do. Many master service agreements also demand specific limits and that you name the operator as additional insured. This week, call a commercial insurance agent who writes oilfield accounts — not a general small-business agent — and describe your exact service. Get a quote and ask what limits the operators in your basin typically require. Carry the certificate on your phone; you will be asked for it at nearly every gate.
The supply chain for a drilling oil and gas wells business is broad, and the categories named here represent only a portion of what you will source regularly. Two foundational supplier categories are oil and gas field machinery manufacturers Oil and Gas Field Machinery Manufacturing, who produce the rigs, rotary tables, top drives, and hoisting systems your operation depends on, and iron and steel pipe and tube manufacturers Iron and Steel Pipe and Tube Manufacturing, who supply the casing, tubing, and drill pipe that go into every well. A third critical category is oilfield chemicals and miscellaneous chemical products suppliers Miscellaneous Chemical Product Manufacturing, who provide drilling fluids, mud additives, and cementing compounds that keep the wellbore stable throughout the drilling process. Beyond these three, your full supply chain will extend to valve and fitting manufacturers, cutting-tool suppliers, cement producers, and equipment finance providers, among others.
### Phase 4 — Operate
Write down how you run a job, start to finish, as a simple checklist: pre-job call, equipment check, safety meeting, the work itself, cleanup, and the paperwork you leave behind. In oilfield services this is not busywork — operators audit their vendors, and a written procedure with a job safety analysis is often required to get on location at all. It also means the work goes the same way whether you run it or a crew lead does. This week, write the steps for your most common job on one page, including the safety checks. Keep it where your crew can pull it up. A repeatable process is what lets you take a second job without dropping the first.
Keep every ticket, invoice, receipt, and payment in order from day one. In this business you run field tickets that turn into invoices, and operators pay on their own terms, so you need to know at a glance who owes you and what you spent on fuel, parts, and labor to earn it. Pick simple bookkeeping software — QuickBooks or similar — and connect it to your business bank account so transactions import themselves. This week, set it up and enter your open invoices and unpaid bills. Reconcile once a week. When tax time or a bank loan or an operator credit check comes, clean books turn a two-day scramble into a two-minute export.
Your business owes taxes on its profit, and how you pay depends on the entity you chose. Most small oilfield operations pay estimated taxes through the year rather than one lump at filing, and if you have crew you also withhold and remit payroll taxes. Fuel tax credits and heavy vehicle taxes can apply to your trucks. This is worth an hour with a professional. This week, find an accountant or enrolled agent who works with oilfield or trucking clients, and ask three questions: what taxes do I owe, when, and how much should I set aside from each payment. Open a separate savings account and park the tax portion of every deposit there so it is never a surprise.
When you cannot cover the work alone, you bring on help, and how you classify that help matters. A day hand you fully direct and equip usually counts as an employee, which means payroll, withholding, and workers' comp; a genuinely independent operator with their own gear and other clients may be a contractor. Oilfield misclassification gets audited, so get it right early. This week, decide which your next hire is, and if it is an employee, set up payroll before their first hitch — the software from step 14 usually handles it. Keep signed agreements and, for contractors, their insurance certificates. Your workers' comp from step 11 has to match the people you actually put on location.
### Phase 5 — Grow
The first three realistic sales for a drilling oil and gas wells business almost always come from relationships, not marketing. If you or a partner came from a larger drilling company, the first call goes to operators you worked with directly—project managers and drilling superintendents who already know your crew's capabilities and will take a chance on a smaller shop for a straightforward vertical well. The second source is independent oil and gas operators in active basins who are too small to attract the major contract drillers but have a consistent two-to-four-well annual program; they need a reliable smaller contractor and are worth targeting with a direct approach. The third path is subcontracting under an established drilling company that is overbooked—taking on overflow work builds your safety record, your references, and your cash flow while your direct client list grows.
Operators and larger service companies find and vet vendors through supplier registries and prequalification systems — networks like ISNetworld, Avetta, or Veriforce are common gatekeepers in oil and gas. Getting listed and verified means your safety record, insurance, and registrations are confirmed once and visible to every operator who uses that network. It is often the difference between being invited to bid and never hearing about the work. This week, ask two operators you want to work for which prequalification system they use, then start your profile there and on Google Business Profile so local searches find you. Load your certificate of insurance and safety documents. A verified profile does your selling before you make the call.
Once you have run a few months, compare your numbers against the industry so you know whether you are healthy or leaking money. Look at what share of revenue goes to labor, fuel, equipment, and insurance in oilfield services, and how long operators typically take to pay. If your costs run high or your collections run slow against typical figures, you have found your next fix. This week, pull your own numbers from the bookkeeping in step 14 — revenue, costs, days to get paid — and write them on one line. Then find published industry benchmarks for oilfield services and set yours beside them. Do this every quarter; the gap between you and the field is your to-do list.
Now write the plan — short, real, and yours. Two pages: what you sell, who buys it, what it costs to deliver, what you charge, and what you want the business to look like in a year. This is not a document for a drawer; it is how you decide what to buy, who to hire, and which work to chase when the rigs slow down or the calls pile up. A tool like the one in this guide can hold the numbers you gathered in steps 10, 14, and 19. This week, fill those five sections in plain words. Read it once a month and change it when the field changes. A business with a written plan survives the downturns that end the ones without.
Starting this business? Get the printable one-page checklist for these 20 steps.
This is how to get started. If you want the whole thing — a plan with your numbers in it, benchmarked against federal figures for your industry, with the procedures for running it already written — that is what we build. A free template asks you to describe your customers. Ours names them.