The Peciko Field contains gas in multiple stacked reservoirs within a Miocene deltaic sequence. In the deeper reservoirs, gas is trapped hydrodynamically by high lateral overpressure gradients. We have analysed overpressure and compaction in this field by using wireline log, pressure, temperature and vitrinite reflectance data. The top of the overpressure is located below 3 km burial depth, below the depth range for transformation of discrete smectite to mixed-layer illite/smectite. Density-sonic and density-resistivity crossplots for mudrocks show reversals within the transition zone into hard overpressure below 3.5 km depth. Vitrinite reflectance measurements indicate that the start of unloading coincides with the onset of gas generation. Moreover, mudrock density continues to increase with depth in the overpressured section to values above 2.6 g cm–3. We conclude that gas generation and chemical compaction are responsible for overpressure generation, contradicting previous interpretations that disequilibrium compaction is the principal mechanism for generating overpressure in the Lower Kutai Basin. The particular circumstances which make our radical interpretation plausible are that it is a warm basin with lateral reservoir drainage, so the overpressured mudrocks are probably overcompacted as a result of diagenesis.