In this chapter, the information about rotary drilling rig components, their purpose and principles of operation is presented through the in-depth analysis of hoisting, rotating and circulating equipment. Detailed classification of drilling fluids and its content is followed by the thorough investigation of the phenomenon of drilling fluid losses. The effects of drilling mud additives and loss circulation materials on rheology and the rate of penetration of drilling mud are supported by the studies of comparing the rate of penetration of drilling mud with various loss circulation materials. Finally, the fluid capability to form filter cake on the borehole walls is presented through the physical simulation of flow.