A method of drilling a wellbore in a formation of a reservoir, the method comprising: providing instrumentation associated with casing disposed in the wellbore ; drilling, in a first stage, an open hole section of the wellbore in the formation for an extent beyond the casing by pumping drilling fluid at a drilling rate through a drillstring and allowing returns of the drilling fluid to surface through an annulus between the wellbore and the drillstring ; detecting , during the first stage of drilling, that a static loss rate of the drilling fluid to the formation reaches within a loss circulation limit of the drilling rate; in response to the detection , (a) filling the annulus of the wellbore with a mud cap of annulus fluid up to a flow control device , (b) determining that the annulus cannot be kept filled with the annulus fluid up to the flow control device , (c) allowing the annulus fluid in the annulus to balance with reservoir pressure, and (d) defining an initial fluid level (IFL), below the flow control device where the mud cap in the annulus is balanced with the reservoir pressure, by monitoring pressure in the annulus using the instrumentation ; drilling, in a second stage, the open hole section of the wellbore in the formation for a subsequent extent beyond the casing while the annulus is filled with the mud cap to the initial fluid level (IFL) by: pumping a sacrificial fluid through the drillstring without returns to surface through the annulus , and monitoring the mud cap in the annulus by monitoring pressure using the instrumentation to detect a change relative to the initial fluid level (IFL); and controlling the drilling in response to the detected change . providing instrumentation associated with casing disposed in the wellbore ; drilling, in a first stage, an open hole section of the wellbore in the formation for an extent beyond the casing by pumping drilling fluid at a drilling rate through a drillstring and allowing returns of the drilling fluid to surface through an annulus between the wellbore and the drillstring ; detecting , during the first stage of drilling, that a static loss rate of the drilling fluid to the formation reaches within a loss circulation limit of the drilling rate; in response to the detection , (a) filling the annulus of the wellbore with a mud cap of annulus fluid up to a flow control device , (b) determining that the annulus cannot be kept filled with the annulus fluid up to the flow control device , (c) allowing the annulus fluid in the annulus to balance with reservoir pressure, and (d) defining an initial fluid level (IFL), below the flow control device where the mud cap in the annulus is balanced with the reservoir pressure, by monitoring pressure in the annulus using the instrumentation ; drilling, in a second stage, the open hole section of the wellbore in the formation for a subsequent extent beyond the casing while the annulus is filled with the mud cap to the initial fluid level (IFL) by: pumping a sacrificial fluid through the drillstring without returns to surface through the annulus , and monitoring the mud cap in the annulus by monitoring pressure using the instrumentation to detect a change relative to the initial fluid level (IFL); and controlling the drilling in response to the detected change . <EOS>