This topic describes about well ballooning. You may hear several terms besides well ballooning as wellbore breathing or micro fracturing phenomenon.
What is well ballooning?
The well ballooning effect is a natural phenomenon occurring when formations take drilling mud when the pumps are on and the formations give the mud back when the pumps are off.
What is mechanism of well ballooning?
While pumps are on, if Equivalent Circulating Density (ECD) exceeds formation fracture, micro fractures are created and drilling mud will lose into small induced formation fractures. The micro fractures can be propagated and it may cause a lot of mud volume losses down hole. Micro fracture will not cause severe losses or totally losses.
When pumps are off, the ECD will reduce because annular pressure loss becomes zero. The induced micro fractures will close and the drilling mud will flow back into a wellbore.
The ballooning can happen into any weak formations, not only at the casing shoe. Sometimes, mud flow back from formations can bring gas or formation water with the mud therefore you may see gas peak or mud contaminated with water while circulating bottom up.
Reference books: 
Well Control Books
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