The casing shear–compression deformation (CS–CD) caused by well-intersecting small fault and large fracture (F–F) slip induced by hydraulic fracturing is considered to be the main casing deformation (CD) type. The CD morphological characteristics can be clearly recognized using multi-finger imaging tool (MIT) data, but the CS–CD morphological characteristics obtained by existing numerical simulations are far from this, which affects the clarification of CD mechanisms and the formulation of prevention measures. In this paper, the F–F slip kinematic characteristics are analyzed first, and the root of the problem of the traditional displacement uniformity model is revealed: the law that the strata on both F–F sides will undergo movements with displacement attenuation from the F–F plane to both F–F sides during F–F slip is ignored. Then, an improved finite element numerical model is proposed based on this insight, which introduces the displacement attenuation law into the CD analysis for the first time, and the change in the casing drift diameter is proposed as the measurement standard of the CD amount. On this basis, numerical simulations with control variables are carried out to further analyze the relationships between the CD amount and the F–F occurrence parameters, and between the CD amount and the structural and mechanical parameters of the strata, cement sheath and casing. The simulation results demonstrate that: (i) the displacement attenuation model reproduces the morphological characteristics of the actual CS–CD, with displacement attenuation resulting in long CD sections; (ii) the CD amount measurement method based on the casing drift diameter more effectively reflects the actual extent of CD; (iii) increasing the steel grade and wall thickness of the casing is not effective in preventing CD. This paper further elucidates the geomechanical mechanism of CD caused by F–F slip and proposes a CD prevention strategy of controlling F–F activation induced by hydraulic fracturing and using specialized cementing materials to install buffers, thereby providing direct guidance for engineering practice.