Shale and shaly formations are the most common lithologies encountered in drilling for oil and gas in the Gulf of Mexico. These formations often cause bit performance problems. This paper introduces a method relating bit performance to the cation exchange capacity of the shaly formation being drilled. The relationship between drilling parameters, such as normalized rate of penetration, and specific energy, and cation exchange capacity, is investigated statistically using actual field data. The correlations have shown potential for diagnosis of ineffective drilling of PDC bits, in overpressured shaly formations. Template charts ate developed based on the correlations to be used for the diagnosis of ineffective drilling for PDC bits while drilling overpressured Miocene shales with water-based mud in offset wells.