Lost circulation is one of the most troublesome and costly problems encountered in drilling. This problem is magnified when expensive oil-based muds are used. There are many lost circulation materials (LCM's) that perform effectively in water-based muds but very few that work well in oil-based muds. Those that do work well are effective in controlling seepage loss only. This paper presents laboratory test results that compare the performance of conventional LCM's with a new high-performance material, composed of thermoset rubber, in controlling mud loss to simulated fractured formations in both oil- and water-based muds. Field case histories describe the effectiveness of the thermoset rubber in fractured formations with severe lost circulation problems.