Tanuma and Zubair formations are known as the most problematic intervals in Zubair Oilfield, and they cause wellbore instability due to possible shale-fluid interaction. It causes a vast loss of time dealing with various downhole problems (e.g., stuck pipe) which leads to an increase in overall well cost for the consequences (e.g., fishing and sidetrack). This paper aims to test shale samples with various laboratory tests for shale evaluation and drilling muds development. Shale's physical properties are described by using a stereomicroscope and the structures are observed with Scanning Electron Microscope. The shale reactivity and behavior are analyzed by using the cation exchange capacity testing and the capillary suction test is utilized for selecting shale inhibitor base. As a result, four drillings muds are formulated with different additives and approved by using the Linear Swelling Meter and the Hot Rolling experiments. Tanuma’s shale is at higher reactivity level, where it is moderate to high active shale than Zubair’s shale, which is at a low to moderately reactive formation. Microfractures and micropores are excited in both formations and potentially in Tanuma’s shale. The shale stability can be achieved by adding 8 % of KCl for Tanuma’s mud and 4% of KCl for Zubair’s mud. The filtration controls are contributed to seal the shale open structures and adding the Poly amino acid hydration suppressant reduced the risk of shale swelling significantly. The results can be used for designing drilling mud to reduce shale instability issues and the cost.