Abstarct: Fluid loss, the leakage of the liquid phase of drilling fluid, is one of the main issues that is encountered in drilling operations, and it is often quite challenging to deal with. It often imposes great expenses to the operation process. Factors such as non-optimal safe mud window, lack of appropriate drilling plans, not optimal designing of the process parameters and wellbore instability might contribute to the occurrence of fluid loss during the operation. This phenomenon of fluid loss might cost millions of dollars due to not only the excessive fluid consumed during the drilling operation but also the inefficient function of the drilling rig. In this study, wellbore instability, as one of the contributing parameters to fluid loss, is analyzed and its influence on the phenomenon is evaluated using data obtained from a hydrocarbon field located in south of Iran. For this purpose, first, petrophysical logs acquired from thea well are thoroughly studied and interpreted in order to attain a comprehensive view of the well lithology. The analysis and interpretation of the petrophysical logs are validated by the associated core reports from Offshore Oil Company. The results have indicated a good agreement between interpretation results of the petrophysical logs and core reports. Thereafter, using acoustic and other petrophysical logs, geomechanical parameters such as Young's modulus, bulk modulus and shear modulus have been determined. It is worth mentioning that due to the lack of some required information including the horizontal stress and principal horizontal strain, data from the nearby wells and also poro-elastic equation was also used in the calculations. After considering all the assumptions and determining all the necessary information, the safe mud window is presented for the examined well. Furthermore, because of the significant effects of the shale on the mud window observed at the depths of 2314.96 and 2400 meters, such behaviors have also been investigated in the current research. It has also been found that the well considered in this study suffers from the tensile failure and mud loss phenomenon largely due to the excess mud weight and negligence of safe mud window which consequently has led to the increase of operational costs. Finally, an effective methodology to control well conditions and to keep optimal functionality and to prevent any unnecessary future expenditures, which might occur, is studied.