The process of perforating petroleum wells is vital in oil production. One problem with the shooting method of perforating is that the formation around the perforation can be damaged, resulting in significant decline in productivity. A high-amplitude shock wave propagates into the rock matrix around a newly created perforation tunnel and its impulsive action shatters rock grains and cementation. The shock wave reduces the mechanical strength of the rock and generates fines (from cracked grains) in the vicinity of the tunnel. There are three options of perforating conditions: under-balanced, balanced, and overbalanced perforating techniques. In an under-balanced perforation, due to surge flow there is the migration of originally undisturbed fines towards the tunnel, which plug the pore throat and thus impair permeability. This region of high fines concentration is known as the compacted or crushed zone and is a primary source of perforation damage. Another source of damage is residual debris not removed from the tunnel. A balanced shot prevents the surge and its concomitant problems, but it results in a concentration of fines in the immediate vicinity of the liner debris. A lack of back surge in overbalanced perforating further deteriorates the production thus eliminating its benefit. This paper is a review paper discussing the nature of compacted zones around a perforation tunnel. A detailed description of perforation techniques including effect of various parameters in perforating is discussed. As well, all aspects of perforation damage are reviewed.