Polymer nanocomposite have fascinated the strong interest due to its capitative properties and potential use for smart drilling fluids in the petroleum industry. Water based drilling fluids are employed for drilling oil and gas wells to extract hydrocarbons from reservoirs. The formulation of drilling fluid includes various additives to control rheological and filtration properties. For this purpose, a novel associative hydrophobic polymer-based nanocomposite was synthesized using functionalized carbon nanotubes, acrylamide, maleic anhydride and diallyl-dimethyl-ammonium chloride via micro emulsion polymerization technique. The chemical structure of novel polymer nanocomposite was characterized with X-ray photoelectron spectroscopy, 13C NMR spectroscopy and Fourier transform spectroscopy to confirm the presence of covalent bond (ester linkage) between hydroxyl group from functionalized carbon nanotubes and carboxylic group from malic acid. Thermo gravimetric analysis was carried out to study the thermal stability of polymer nanocomposite. The morphological characterization of novel nanocomposite was performed with Field emission scanning electron microscope and Transmission electron microscope to study the complex interactions between nanoparticles and synthesized polymer. The dynamic rheological experiments of polymer nanocomposite were also performed with various concentrations (0.1 to 1 wt.%) in deionized water to study the effect on viscoelastic properties. The synthesized polymer nanocomposite can be used as one of the additive in water based drilling fluids to modify rheological and filtration properties. Further details will be presented in conference paper and presentation.