The Lujiabao Depression,situated in the east part of the inner Mongolia withan area of 2500 km2,is one of the two biggest depressions in the Kailu Basin.The basement consists of hypergone metamorphic rocks of the Carboniferous-Permian Systems and the sediments with the total thickness of 5000m inthe basin are mainly made of Upper Jurassic,Cretaceous and few Cenozoic.Its evolution can be divided into two.stages.Fault-subsidence occurred in theLate Jurassic and depression in the Early Cretaceous.The Fuxin,Shahai andJiufotang Formations of the Upper Jurassic are considered as three source beds.The former is a poor one belongs to sapropel type,the latter two are betteror fine ones with abundant organic matter,of which the first two are sapro-pelic and the last belongs to humosapropelic type.In accordance with the ratioof hydrocarbon transformation,and of vitrinite-reflectance and OEP value,oil-generating threshold is determined to be 1400m in depth,lower-maturationstage is in 1400-1780m,and maturation stage in 1780-2200m.It is suggestedthat the Jiufotang and Shahai Formations have reached the oil threshold,andthe valuable thickness of source rocks is about 700m.Sandstones and contem-poraneous faults and secondary structures related to faults are well develo-ped in the depression.The formation time of traps coordinated with that ofoil-gas generation,thus oil show has been discovered in 5 wells there.