As the world energy demand increases, drilling deeper wells is inevitable. Deeper wells have abnormal pressure zones where the difference between pore pressure and fracture pressure gradient, is very small. Smaller drilling margins make it harder to drill the well and result in high operation costs due to the increase of non-productive time. One of the major factors influence non-productive time in drilling operations is lost circulation due to drilling induced fractures. The most common approach is still plugging the fractures by using various loss circulation materials and there are several wellbore strengthening techniques present in the literature to explain the physics behind this treatment. This thesis focuses on development of a rock mechanics/hydraulic model for quantifying the stress distribution around the wellbore and fracture geometry after fracture initiation, propagation and plugging the fracture with loss circulation materials. In addition, fracture behavior is investigated in different stress states, for different permeability values and in the presence of multiple fractures. The following chapters contain detailed description of this model, and analysis results. / text