A lignite graft polycondensate having water retention and dispersion properties in a water-bentonite slurry was synthesized by grafting sulfomethyl phenol-aldehyde resin (SMP) onto a humic acid (main component of lignite) scaffold through aqueous condensation polymerization. FTIR (Fourier-transform infrared) spectroscopic analysis and measurement of the molecular weight of the polycondensate confirmed successful grafting of the SMP. The resulting lignite graft polycondensate used as a drilling fluid controlled the fluid volume and exhibited rheological stability at aging temperatures as high as 200 A degrees C. The properties of the polycondensate distinguish it from most of the high-temperature fluid-loss additives, which make the slurries excessively viscous. The colloidal properties of the water-bentonite slurry were investigated by adsorption and zeta potential experiments, and a possible mechanism was proposed.