This paper presents the results of an experimental study on the extent, depth, and distribution of mud induced formation damage around a horizontal wellbore. This investigation aims at addressing the question of how much damage is caused in the bottom, middle, and upper portions of the heel and toe when a horizontal well is drilled. Our simulated borehole consists of a 5 diameter pipe rotating inside a 7 diameter pipe. Three core holders are placed at the top, middle and bottom of the simulated borehole. The fluid loss rate and the permeability of 4 different sections of the core are measured as mud is circulated in the annulus and the inside pipe is rotated. The formation damage and the fluid loss data for the top, middle and bottom of the wellbore are measured for different drill-in fluids, axial velocities and pipe rotation rates. It is found that when the drill pipe is concentric the fluid loss rate is symmetrical and independent of axial fluid velocity and rotational speed of drill pipe, over the range of rpms and velocities studied. For eccentric annuli (as might be expected in horizontal wellbores) the extent of damage and fluid loss vary azimuthally with the most damage occurring in the bottom portion of the hole. The extent and depth of damage are related to the speed of drill pipe rotation and the time of exposure to the mud. Erosion of the mud cake at the bottom of the hole plays an important role in the distribution of formation damage around the hole. Both the drill-in fluids tested, sized calcium carbonate and sized salt, were found to be relatively non-damaging. However, the presence of drill solids in the mud induces significant damage.