Thirty-six formation waters, gas, and microbial samples were collected and analyzed from natural gas and oil wells producing from the Paleocene to Eocene Wilcox Group coal beds and adjacent sandstones in north-central Louisiana, USA, to investigate the role hydrology plays on the generation and distribution of microbial methane. Major ion chemistry and Cl−Br relations of Wilcox Group formation waters suggest mixing of freshwater with halite-derived brines. High alkalinities (up to 47.8 meq/L), no detectable SO4, and elevated δ13C values of dissolved inorganic carbon (up to 20.5‰ Vienna Peedee belemnite [VPDB]) and CO2 (up to 17.67‰ VPDB) in the Wilcox Group coals and adjacent sandstones indicate the dominance of microbial methanogenesis. The δ13C and δD values of CH4, and carbon isotope fractionation of CO2 and CH4, suggest CO2 reduction is the major methanogenic pathway. Geochemical indicators for methanogenesis drop off significantly at chloride concentrations above ∼1.7 mol/L, suggesting that high salinities inhibit microbial activity at depths greater than ∼1.6 km. Formation waters in the Wilcox Group contain up to 1.6% modern carbon (A14C) to at least 1690 m depth; the covariance of δD values of co-produced H2O and CH4 indicate that the microbial methane was generated in situ with these Late Pleistocene or younger waters. The most enriched carbon isotope values for dissolved inorganic carbon (DIC) and CO2, and highest alkalinities, were detected in Wilcox Group sandstone reservoirs that were CO2 flooded in the 1980s for enhanced oil recovery, leading to the intriguing hypothesis that CO2 sequestration may actually enhance methanogenesis in organic-rich formations.