This chapter is proposed to give the principal learning on the application of the formation of petroleum source rocks and hydrocarbon generation to exploration activities. The evaluation of petroleum source rocks and hydrocarbon generation is a very important skill for explorationists to define the location and type of petroleum prospects in a region. In this chapter, subsurface samples from case study (Sayun-Masilah basin) were used to determine the source rock characteristics and petroleum generative potentials of prospective source rocks. Qualitative and quantitative evaluation of the source rock in this basin was done by means of geochemical and geophysical approaches for four rock units. It is clear that Madbi Formation is considered the main source, in which the organic carbon content reached up to more than 5.2 wt%. The types of organic matter from rock-eval pyrolysis data indicated that type I kerogen is the main type, in association with type II, and a mixture of types II and III kerogens. The study of the different maturation parameters obtained from rock-eval pyrolysis, such as Tmax and vitrinite reflectance, reflects that the considered rock units are occurred in different maturation stages, ranging from immature to mature sources. One-dimensional basin modeling was performed to analyze the hydrocarbon generation and expulsion history of the source rocks in the study area based on the reconstruction of the burial and thermal maturity histories in order to improve our understanding of the hydrocarbon generation potential. Calibration of the model with measured vitrinite reflectance (%Ro) and borehole temperature (BHT) data indicates that the paleo-heat flow was high at Late Jurassic. The models also indicate that the early hydrocarbon generation in the Madbi source rock occurred during late Cretaceous and the main hydrocarbon generation has been reached approximately at Early Eocene. Therefore, the Madbi source rock can be considered as generative potentials of prospective source rock horizons in the Sayun-Masilah basin.