How to Start an Oil and Gas Operating or Services Company in West Virginia: DEP Well Work Permits and the Horizontal Well Act

Most people who ask how to start an oil and gas business in West Virginia are really asking two questions. The first is how to form and register the company. The second is what has to be in place before anyone disturbs the ground. Those are separate tracks. The company filing with the Secretary of State is a short form and a modest fee. The well work permit from the Department of Environmental Protection (DEP) comes with permit fees and bonds that cost far more than the filing itself.

This guide covers two kinds of company. An operating company drills, completes, or works wells and holds the permit. A services company works on pads, roads, water, hauling, or equipment for an operator, and usually does not hold the well permit itself. Both kinds register with the same state agencies. Which permits you need depends on the work you actually do, so decide that early.

The value of the sector gives context for why people look at this market. Value added by oil and gas extraction in West Virginia grew from $2.2 billion in 2020 to $6.1 billion in 2025, according to the Bureau of Economic Analysis. That growth shows the size of the industry. It does not tell you what work you will win or what you will earn.

This article is informational content, not legal or tax advice. Before you sign a lease, an operating agreement, a drilling contract, or a bond, talk with a West Virginia attorney who handles energy work, and talk with a CPA who understands pass-through taxes and production-level taxes.

What you need before you start

Gather these items before you file anything, so each step can move without stopping to look something up.

• A proposed company name that meets West Virginia naming rules and does not match a name already registered or reserved with the Secretary of State
• Articles of Organization (Form LLD-1) for an LLC, or Articles of Incorporation (Form CD-1) for a corporation
• The $100 filing fee, paid through the WV One Stop Business Portal
• A registered agent name and address, only if you decide to appoint one, since the agent is optional
• A federal Employer Identification Number from the IRS
• The $30 Business Registration Certificate application from the State Tax Division (Form WV/BUS-APP, or online)
• For each well site: a surveyed plat, a soil erosion control plan, and a list of surface owners and other affected parties who must receive notice
• Bond commitments from a surety or bank: $50,000 per horizontal well or a $250,000 blanket bond, and $5,000 per conventional well or a blanket bond
• Permit fee funds: $10,000 for the first horizontal well on a pad and $5,000 for each additional well on that pad
• A written list of every service you plan to sell, so you can check each one against the licensing agencies in step 7

Step 1: Choose your structure and clear the name

An LLC is the common choice for operating and services companies because it is a pass-through entity. West Virginia repealed its business franchise tax, so an LLC pays no state franchise tax and, as a pass-through, no corporation net income tax. The members report the company's income on their personal income tax return, which runs from 2.11% to 4.58% across five brackets for tax year 2026.

A corporation pays a 6.5% corporation net income tax on federal taxable income, apportioned by a single sales factor. A corporation can make sense if you plan to bring in outside investors, issue several classes of ownership, or stage a larger financing. Make that choice with your CPA, not from a fee comparison alone.

An LLC name must contain "limited liability company," "limited company," or an approved abbreviation such as LLC, L.L.C., L.C., or LC under WV Code 31B-1-105. "Limited" may be shortened to Ltd. and "Company" to Co. A name like Ridgeline Energy with no designator does not meet the statute. Search the register at the Secretary of State's business search. If you need time to line up the rest of your paperwork, you can reserve the name for 120 days for $15 at sos.wv.gov.

Step 2: File the formation document and set the annual report date

File the Articles of Organization online through the WV One Stop Business Portal. The filing fee is $100. Standard processing takes 5 to 10 business days. Expedited options cost extra on top of the $100: $25 for next business day, $250 for a 2 hour filing, and $500 for a 1 hour filing. Online filings also add a $1.00 portal processing fee. Confirm the current expedited schedule on the Secretary of State's business page before you pay for speed.

The registered agent is optional. The Secretary of State is appointed as statutory attorney-in-fact for every entity that files organizing documents, so it can accept service of process for you. If you name an agent, it can be an individual resident, a corporation, or another LLC. Keep the agent and address current, and file changes on Form AAO for $15.

Put the annual report on your calendar now. The $25 Annual Report is due between January 1 and June 30 each year after the year you registered. A filing after June 30 costs $75 because of a $50 late fee.

Step 3: Get your EIN and register with the State Tax Division

Apply for a federal EIN with the IRS once the entity exists, then open a business bank account in the company's exact legal name. Lenders, operators, and sureties will all ask for both.

Every individual or business entity must hold a Business Registration Certificate from the West Virginia Tax Division before doing business in the state. The one-time fee is $30. You need a separate certificate for each business location, and it stays in force until the business name, location, or ownership changes. Filing with the Secretary of State does not replace it. If your company sells taxable goods or services, register for a sales tax permit through the Tax Division's business registration page. The state sales tax rate is 6%.

Production taxes on oil and gas are a separate subject that this article does not cover. Ask your CPA which production-level taxes apply to your operating activity, and how they apply to a services company that sells to an operator.

Step 4: Plan for city taxes and licenses

West Virginia has 55 counties and 230 incorporated places, and the city rules often catch new owners off guard. The state business and occupation (B&O) tax applies only to utilities. The gross-receipts B&O tax that reaches shops, contractors, and service companies is levied by cities. Cities also issue their own business licenses and collect a weekly per-worker service fee.

Sales tax works the same way. The state rate is 6%, and 101 municipalities add a 1% city sales tax today. That count rises to 107 starting January 1, 2027. A field site outside city limits may avoid these city charges, but a yard, shop, or office inside a city such as Charleston or Morgantown may not. Ask the city clerk which rules apply to your address and confirm current rates in writing, because they change.

Step 5: Confirm that your work needs a DEP well work permit

The DEP Office of Oil and Gas permits well work under W. Va. Code 22-6 for conventional wells and under 22-6A, the Natural Gas Horizontal Well Control Act. Under 22-6-6, no one may start well work without a permit, and that includes site preparation that disturbs land. Clearing a pad for an operator is site preparation. If you do that work before the operator's permit is issued, you can be in violation even though you are not the permit holder.

For a horizontal well, the permit fee is $10,000 for the first well on a pad and $5,000 for each additional well (22-6A-7). Each application needs a plat, a soil erosion control plan, and notice to surface owners and other affected parties (22-6A-10). Optional expedited review adds $20,000 for the first well and $10,000 for each additional well. If DEP misses its 45-day deadline, part of the expedited fee is refunded. A permit modification costs $2,500 (22-6A-7a).

Here is the fee arithmetic for a three-well pad, using only the figures above. The base permit fees come to $20,000 ($10,000 plus two $5,000 fees). Expedited review on the same pad adds $40,000 ($20,000 plus two $10,000 fees). The total is $60,000 before bonds and other costs. Confirm the figures with DEP before you budget around them.

Large pits and impoundments need a certificate of approval and an annual registration fee under 22-6A-9. The fee amount was not among the figures we verified, so ask DEP for the current schedule. For conventional well permit fees and forms, call the DEP Office of Oil and Gas at 304-926-0499.

Step 6: Post the bond

A horizontal well needs a $50,000 bond per well (22-6A-15), or a $250,000 blanket bond that covers the operator's wells. A conventional well needs a $5,000 bond per well or a blanket bond under 22-6-26. The blanket amount for conventional wells was not in the figures we verified, so confirm it with DEP.

A blanket bond is cheaper in face amount once you have more than five horizontal wells. Five wells at $50,000 each equal $250,000, so every well after that costs you nothing extra in bond face value. Remember that you pay a surety premium, not the face amount, so get a quote from a surety before you plan the cash flow.

Step 7: Check the trade licenses for your services

West Virginia licenses many trades statewide, and the rules apply to service companies that do the work. Check each of these before you bid:

• Contractor Licensing Board: a contractor license is needed above $5,000 for residential work or above $25,000 for commercial work. Pad, road, and site construction may fall under those thresholds, so confirm with the Board how your contracts are classified.
• State Fire Marshal: electricians. Confirm the license for any electrical work at a site or yard.
• Division of Labor: plumbers and HVAC technicians.
• WVDA: pesticide applicators. If you spray herbicides to control vegetation on pads or rights-of-way, confirm the applicator requirements with the Department of Agriculture.
• Royalty and landman services: we did not identify a state license for these services. That does not mean none applies. Check with the DEP Office of Oil and Gas and the Secretary of State before you market either one.

City occupational licenses may apply on top of all of these, so repeat the city check from step 4 for every location you work from.

Step 8: Set up contracts, insurance, and operating basics

Operators usually set insurance and indemnity terms in their master service agreements, and those terms often exceed what a new company carries. Get quotes for general liability and any other coverage the operators you target require, and ask your insurance agent whether workers' compensation is required for your employees. Read every indemnity clause with an attorney before you sign, because it decides who pays when a site goes wrong.

Keep the company's money separate from yours. Use the business bank account for all company receipts and payments, and keep the bonds, permits, and certificates in one file that you can hand to an operator or an inspector on short notice.

The West Virginia Small Business Development Center can help with planning and financial questions, and the SBA West Virginia district office lists local resources.

Step 9: Calendar the recurring obligations

• June 30 each year: file the $25 Annual Report to avoid the $50 late fee
• Each change to name, location, or ownership: update the Business Registration Certificate with the Tax Division
• Each registered agent change: file Form AAO for $15
• Each permit change to a pad or well plan: budget the $2,500 permit modification (22-6A-7a)
• Ongoing: maintain the bonds, permits, and any pit or impoundment registrations DEP requires
• Each tax year: members' personal income tax, or the corporation net income tax if you formed a corporation

Tips that save money and time

• Ask the operator who will hold each permit before you bid, so you know whose site prep you are responsible for and whose bond applies.
• Order the plat and the erosion control plan early. They are required for every application, and they are the most common reason an application stalls.
• Use expedited review only when a schedule depends on it, and get the refund terms in writing.
• Compare a blanket bond to per-well bonds with a surety once your well count is clear.
• Check the city rules for each location, including yards and storage lots, not just the main office.

Common mistakes to avoid

• Starting site prep before the permit issues. Under 22-6-6, clearing land for well work without a permit is prohibited, whether or not you hold the permit.
• Treating the Secretary of State filing as a license. The Articles of Organization make the company legal. The $30 Business Registration Certificate from the Tax Division is what lets it do business.
• Forgetting the per-location rule. A certificate covers one fixed location. A second yard needs its own certificate.
• Missing the June 30 annual report. The late fee brings the total to $75.
• Assuming a name works without a designator. Leave out "LLC" or "limited liability company" and the name is not valid for an LLC.
• Relying on an old fee. Check current permit fees, bond figures, and city rates with the agency before you price a bid.
• Assuming no license applies. The absence of a state license for royalty or landman work was not confirmed as a rule. Ask the agencies.

What to expect

A clean formation filing with the Secretary of State is usually done in 5 to 10 business days under standard processing, and you can usually expect the annual report to take about the same effort each June. The DEP permit timeline is the variable that matters most. The expedited option has a 45-day DEP deadline with partial refunds if DEP misses it, but the standard review period was not among the figures we verified, so ask DEP for it before you commit a drilling schedule.

A realistic first-year plan for a small services company is to finish the entity filing, the tax registration, and the city checks first, then line up the bonds and insurance, then pursue DEP permits only for work an operator has actually awarded to you. That order keeps your fixed costs low until a job is in hand. Expect the largest early cash outlays to be the permit fees, the bond premiums, and the insurance, not the state filing.

Next steps

Start with the Secretary of State name search, then file the Articles of Organization through the WV One Stop Business Portal. Register with the Tax Division before your first job, call the DEP Office of Oil and Gas at 304-926-0499 for the permit schedule, and book a session with your attorney and CPA before you sign any lease, drilling contract, or bond.

This article is informational content, not legal or tax advice. Permit fees, bond amounts, license thresholds, and city rates change, and some figures above are marked for confirmation with the named agency. Verify every number before you rely on it.