Abstract: Lost circulation frequently occurs in the E32 condensate gas reservoir of Nanyishan area in Qinghai Oilfield, as the main consists of formation is carbonate rock, and formation pore pressure almost equals to lost circulation pressure. Underbalanced drilling technology is used to minimize formation damage and avoid drilling problem, and the determination of related drilling parameters and design principles are presented. As an example well N12 drilling plan and field operation is described in detail, i.e., equipment used, drilling parameters, and drilling fluid performance, etc. The drilling practice in this well shows that underbalanced drilling technology could minimize the formation damage and downhole troubles, while it improves ROP and cuts down drilling cost. It concluded th at underbalanced drilling technology is valuable for drilling the complicated condensate oil/gas reservoirs.