Spent drilling mud (DM), a co-product during horizontal directional drilling operations, needs proper disposal to comply with social and environmental sustainability awareness, with one option being its cost-effective reuse as a soil amendment. The possibility was investigated of DM applications to improve the physical quality of loamy sand soil. The soil was treated with increasing DM contents in a laboratory at volumetric DM-to-soil ratios of 0:100 (DM0, no DM), 25:75 (DM25), 50:50 (DM50), 75:25 (DM75), and 100:0 (DM100, no soil). The mixtures were analyzed for water retention, available water capacity, water storage capacity, S-index, soil aggregate stability (SAS), and chemical quality based on pH, effective electrical conductivity (ECe), sodium adsorption ratio (SAR), and exchangeable sodium percentage (ESP). The optimal ratio of DM and the control (DM0) in the batch experiment were selected for application to three species of forest plant seedlings in the field. The results showed that DM positively influenced soil physical qualities. The water retention increased (from 10 to 67%) with increasing DM, but the most suitable ratio was DM25, considering its water storage capacity deviated the least (1.4%) from the optimal value. DM25 also produced the highest S-index (0.081). The SAR data increased with the drilling mud application rate (1.1 to 10.9). However, the DM25 pH remained at 7.7, with an ECe of 2.5 dS m−1, a SAR of 7.0, and an ESP of 9.2, which were still favorable regarding soil structure, as indicated by no decrease in SAS with added drilling mud. In the field experiment, DM25 also decreased the water deficit of the three species of forest plant seedlings, suggesting a positive attribution to other relevant soil-plant systems. DM could be a feasible option to improve soil physical quality, but further long-term experiments are necessary before applying it as a soil amendment in real situations. Implication statement With the demand in energy-driven economics, establishing national energy security nationwide in Thailand requires the installation capacity, transmission, and distribution pipelines. Horizontal directional drilling (HDD) operations are generally used to install underground pipelines, generating large amounts of drilling mud rich in sodium bentonite as a co-product. At present, drilling mud is becoming a more serious solid waste and has been raised in proper management. The best management practices are expected to reuse as a soil amendment, a cost-effective approach, for coarse-textured soils. Before any drilling mud application can be introduced to agriculture and the environment, we must clarify the optimal rate of drilling mud. This rate has to significantly improve soil physical quality associated with air-water capacity balance while minimizing the adverse effect of residual sodium to favor soil structure and sensitive plants.