our current position, page-62

Here is some explanation of the mud loss, I think!

" Lost circulation

One of the most important mud properties is the mud weight (density). If the mud weight exceeds the fracture pressure of the formation, the formation may fracture and large quantities of mud are lost inside it, in a situation referred to as lost circulation. These cracks can also cause water to seep into the well bore or into a hydrocarbon bearing zone, which would likely impede the ability of the formation to produce oil (or require the separation of large quantities of water).

Conversely, if the mud weight is too low it will have a hydrostatic pressure that is less than the formation pressure. This will cause pressurized fluid in the formation to flow into the wellbore and make its way to the surface. This is referred to as a formation "kick" and can lead to a potentially deadly blowout if the invading fluid reaches the surface uncontrolled.

Other important mud properties to be maintained are the YP (Yield Point) which determines the carrying capacity of the mud to suspend and carry the drill cuttings and the ability of the mud to form "mud cake" which forms a lining of the borehole walls."

http://www.worldlingo.com/ma/enwiki/en/Mud_engineer