Five potential source rocks have been discovered in the middle Proterozoic of the McArthur basin. The lacustrine Barney Creek Formation (McArthur Group) and the marine Velkerri Formation (Roper Group) compare favorably in thickness and potential with demonstrated petroleum source rocks in the Phanerozoic. The former contains up to 7% total organic carbon (TOC) and kerogen types I and II. TOC values in the latter range up to 6.5% and the kerogen is type II. Petrographic examination shows the organic matter is mostly lamalginite, which on maturation yields "nonfluorescent lamalginite" and bitumen. Extractable hydrocarbon yields from mature samples indicate that good to excellent source rocks are present and there is ample evidence of migration having occurred. T_{max values derived from Rock-Eval analysis may be used to define maturation levels in much the same way as in Phanerozoic sediments. At low maturation levels, the reflectivities of lamalginite and bitumen are lower than vitrinite reflectance values calculated from methylphenanthrene indices, but converge in the mature zone. This convergence reflects both the inherent lower reflectivity of hydrogen-rich macerals and the source control on methylphenanthrene indices at low maturity. Maturation levels in McArthur Group sediments vary from marginally mature to overmature with abrupt changes over short distances associated with faults. Hydrocarbon generation occurred prior to the deposition of the younger Proterozoic sediments of the Roper Group. In contrast, the source rocks in the Roper Group re marginally mature to mature throughout the study area and are overmature only where they are affected by igneous intrusions. Considerations of burial history suggest that hydrocarbon generation may have occurred during deposition of the Roper Group although an early Paleozoic timing cannot be excluded.}