The properties of a sheared zone in the Eocene Yegua Formation were investigated to evaluate the trapping capacity of faults. An 11-m core of Yegua sandstone at a depth of 3029 m shows highly sheared bedding and increasing dip from 10 to 30° with depth. Porosity and permeability of the sheared zone range from 10 to 12% and 1 to 5 md, respectively (about 10–16% of porosity reduction and 29–60 md of permeability reduction). Most pores in this sandstone are of secondary origin. Pores in the sheared zone were deformed and collapsed because of clay smears and shear. Physical characters of sheared zones were investigated by optical and scanning electron microscopy (SEM). A reduction of porosity and permeability with depth approaching the sheared zones created a capillary barrier that prevents hydrocarbon drainage and compartmentalized the reservoir. Initial oil/water, capillary displacement pressure of the sheared zone is 100 psi (6.89×105 Pa), sufficient to trap an average oil column of 210 m and gas column of 70 m.