It is generally believed that a higher efficiency of flowback of the invaded fluid will result in a reduced formation damage and a higher oil rate. However, in water-wet formations having flow characteristics close to those seen in low permeability formations, high flowback does not always result in high oil production rates. In such reservoirs, the strength of capillary gradient across the matrix-fracture interface controls the amount of invaded-fluid flowback. This paper discusses two factors which impact the strength of capillary gradient: depth of fracture fluid invasion and presence of moderate interfacial tension (IFT) surfactant in the fracture fluid. Microfluidic-chip or otherwise called Lab-on-a-Chip based experiments are conducted in this work to highlight the discussed factors. For a water wetting chip, it is observed that as the depth of fracture fluid invasion into the matrix increases, flowback efficiency is improved while the late-time oil production rate decreases. Additionally, it is found that the presence of a moderate IFT-reducing surfactant in the fracture fluid aids in reducing the invasion-induced formation damage compared to a fracture fluid without surfactant. The work presented strongly impacts the oil industry in contemporary times when hydraulic fracturing is significantly prevalent. The results obtained provide a better understanding of the flow behavior of in-situ and invaded fracture fluids during production phase of the operation.