Capacitance-resistance model (CRM) is a nonlinear signal processing approach that provides information about interwell communication and reservoir heterogeneity. Several forms of CRM have been introduced; however, they would deliver erroneous model parameters if production history involves shut-in period. To address this issue, this study presents a dynamic capacitance-resistance model (D-CRMP), a comprehensive formulation that is capable of handling multiple shut-in periods in different producers. CRM model parameters are representative of the geological information. Accordingly, two geologically identical synthetic examples are used to validate D-CRMP; one including shut-in periods in historical production data of some producers and the other one with all continuously operating wells. Obtaining the same model parameters and the high quality of fitting in both cases proved the reliability of D-CRMP, which allows the utilization of historical data to characterize the reservoir behavior in real cases. Investigation of uncertainty on the fitted model parameters was also performed to demonstrate that confidence intervals are affected mostly by two aspects; permeability distribution and interwell distance. It is shown that though the confidence intervals in the heterogeneous fields are relatively higher than the homogeneous examples, higher permeability and lower producer-injector distance reduce the uncertainty of model parameters in both cases. This study also applies the proposed model in reservoirs with horizontal wells and further examines the impact of well direction and length of the productive interval on the connectivities between wells. Keywords Capacitance-resistance model • Reservoir characterization • History matching • Waterflood • Shut-in well • Horizontal well Abbreviations BHP Bottom-hole pressure CMG Computer modeling group Ltd. CRM Capacitance-resistance model CWI Cumulative water injection D-CRMP Dynamic capacitance-resistance model ICRM Integrated capacitance-resistance model IMEX Implicit-explicit black oil simulator IWC Interwell connectivity MLR Multivariate linear regression MSHW Multi-segmented horizontal well List of symbols L, F, t Mean length, force, and time, respectively c t Total compressibility (L 2 /F) f ij Interwell connectivity between injector i and producer j , dimensionless I Water injection rate (L 3 /t) J Productivity index (L 5 /F − t) N p Cumulative liquid production rate (L 3 /t) n P Total number of producers n T Total number of historic time periods n I Total number of injectors P wf Well bottom-hole pressure (F/L 2) q Total liquid production rate (L 3 /t) R 2 Correlation coefficient Time constant, t