Sand production and open hole collapse during production have been a great concern for production engineer, as the detrimental consequences are often associated to a desirable high production. Sand production usually occurs under a high-pressure gradient in poorly cemented formations. Whereas wellbore collapses could occur if a bottom hole pressure is below a certain level or production reaches a certain rate, i.e. during underbalanced drilling, under a high rate production, or when an aggressive well completion for high production is used. To determine the critical flow rate or bottom hole pressure, a coupled reservoir-geomechanics model is developed to simulate the interaction between reservoir flow and deformation. The model is developed and implemented numerically in Finite Element method by fully coupling a comprehensive geomechanics model to a three-phase reservoir behavior model. Gas component behavior is only considered below a bubble point, and it remains inside the oil phase before a critical gas saturation can be reached in our simulations. The effects of multiphase behavior on near well stresses and deformations, including high compressible gas component in the solution gas phase (foamy oil) are analyzed. Both Mohr-Coulomb and Drucker-Prager criteria are introduced to outline the plastic yielding surface and to govern the plastic flow. The effects of the stress-dependent formation moduli and permeability changes are permissible. The final stability and the onset of sand production are determined by a critical effective plastic strain and zero effective radial stress, whichever condition occurs first. Our studies indicate that, other than the well known factors such as bottomhole pressure and drawdonw, well stability and sanding risks are critically controlled by (1) the solution-gas behavior, (2) the formation stiffness, and (3) the residual cohesion. The latter can be senstitive to the wetting phase saturation. Considering production enhancement and formation damage, the reservoir porosity increase due to formation dilation is simulated, which can generate a negative skin near a well and result in a production enhancement. Our model can be used to calculate both the enhanced production and the ranges of the enhanced zone.