Neogene sedimentany, strata in Hungary contain important mineral resourcs: pelitic rocks, deposited during the last major deltaic depositional cycle in the Pannonian Basin. are considered to be the principal sources of petroleum.The organic‐geochemical investigations presented in this paper show that these Neogene sediments not onlv constitute a good gas‐prone source. but are also a fair oil‐prone source. About 75% of disseminated rganic matter in these deltaic sediments was found to be gas‐prone kerogen (Type III), and more than 13% of the examined samples were oil‐prone, containing Type II kerogen. More than 10% of the sedinirnts contained mixtures of II and III kerogens.At the end of the Neogene highly oil‐prone, organic‐rich sediments (alginites) were deposited in small volcanic tuff rings which, formed during the, final episode of basaltic volcanism (3–5 ± 0.9 million yrs ago) in the Pannonian Basin. This depositional environment, together with the richness of the biological precursor materical, and the good preservation of algae, resulted in the formation of Types I and II kerogens. which have an excellent liquid hydrocarbon potential.The qunlity and quantity of organic matter deposited in the two main stages of the deltaic system are different. Thus, sediments deposited during the deep‐water stage were, found to be fair oil source rocks. As a consequence of the frequent lignite horizons. which illustrate the increasing importance of terrestrial conditions, the shallow‐water sequences constitute a gas‐prone source rock. with a high