The Velkerri Formation ( approximately 1.43 Ga) in northern Australia is one of the organically richest Proterozoic successions in Australia and over the last 10 yr has been a target for oil exploration. This formation is predominantly a glauconitic marine shale deposited in restricted to anoxic conditions in a deep-water pro-delta slope to basin environment. The Velkerri Formation is composed of superimposed sediment couplets made up of laminated black organic-rich mud shales [total organic carbon (TOC) approximately 4-6%] and laminated gray-green organically lean mud shales (TOC <2%). The couplets stack at scales ranging from centimeters to meters. Of particular interest are three black organic-rich mud shales in the middle Velkerri Member, tens of meters thick and correlatable over much of the drilled area of the basin. Their high organic contents reflect changes in organic productivity vs. the rate of sediment supply, and not fluctuating oxygen levels in the bottom waters or changes in water depth. Extractability and Rock-Eval data show more efficient expulsion of hydrocarbons from the upper two of the three organic-rich units in the middle Velkerri. Evidence also exists for local, intraformational migration of hydrocarbons into siltstone layers. Nevertheless, the middle Velkerri has very low permeability and porosity, and still retains a significant fraction of its generated hydrocarbons, especially in the lower portions of the middle Velkerri where a volcanogenic provenance led to the early blocking of pore throats by clay diagenesis during early burial. This study emphasizes the high quality of Middle Proterozoic source rocks for petroleum exploration in northern Australia. The main problem is finding traps that can preserve hydrocarbons over the long periods of time since the rocks became charged with hydrocarbons.