Typical analysis of the Leak-off testing (LOT) in wells assumes elastic wellbore and involves identification of diversion points from linear trends of the recorded plots. However LOTs from wells in the shallow marine sediments (SMS) are inherently nonlinear and their analysis becomes a problem. The paper presents mathematical models of the pressure-volume behavior for two different possible failures around the casing shoe, annular crack (cement-rock parting) and formation fracture. The study submits that these two failure modes would control abnormal LOT patterns. A general pressure-volume model of LOT has been developed including volumetric effects of wellbore expansion, mud loss into the rock, and propagation of an annular crack or plastic fracture. A diagnostic method is proposed to identify LOT-control mechanisms (i.e., formation fracture, annular crack, or mud loss) by analyzing the shut-in section of the LOT's plot.