Drilling programs continue to push into new and more complex environments. As a result, accurate measurements of drilling data in real time are becoming more critical by means of minimizing the risks as well as the costs. A rotating ultrasonic caliper sensor is a key measurement for determining the borehole geometry in MWD (measurement while drilling) and LWD (logging while drilling) tools. The measurement of actual wellbore shape in real-time can be considered as one of the key components to detect problems such as borehole instability. Abnormal wellbore shape will allow drawing conclusions on the stress field. By knowing abnormal wellbore shapes the response of other sensors, as part of LWD and MWD, could be better interpreted. The measurements are transmitted to the surface and used to compensate other logs of MWD and LWD measurements. Furthermore, with early and accurate real-time caliper measurements, borehole instability can be detected. For example, an elliptical wellbore can indicate the maximum and minimum stress directions. Borehole enlargement or washout can indicate that the mud is too heavy or too reactive with the formation. An under-gauge borehole might indicate bit wear. The scope of this work is to (1) develop an ultrasonic caliper tool for borehole geometrical measurement and (2) developing an extra ultrasonic sensor to record the speed of sound in the drilling fluid at the desired depth. Using this package will allow gas kick detection in real time drilling operation. In the beginning, this work discusses wellbore instability and causes of instabilities in detail. Methodology for solving the instability problems, introduction of the ultrasonic caliper and using it to monitor the wellbore profile in real time is illustrated. Next, the development of new ultrasonic sensors and the physical properties of sound and echo are described in detailed. The measurement principle of an ultrasonic sensor and the method by which an echo is created by the sensor and sent towards an object and reflected back for distance measurement is explained. Another chapter discusses the experiments related to the accuracy of the ultrasonic sensor measurements for estimation of the wellbore geometry. Numerical simulation of the ultrasonic measurements and comparison of the simulated results to the recorded data gives estimation how accurate the data are, depending on the position of the tool in the borehole. Measurements are performed in artificial wellbores with geometrical anomalies like washouts and squeezing formations. It is shown that such anomalies can be detected with an appropriate accuracy if circle fitting methods like the Kasa method in combination with robust error models are applied. By developing a reference ultrasonic sensor, sound velocity in different drilling fluid was recorded and with this method a gas kick could be detected.