In order to recognize the exploration potential of Houzhen sag, the Houzhen sag are studied herein with respects to structure,paleogeographic environment and geochemical characteristics of the source rocks, hydrocarbon-generating conditions. Studies show that the Houzhen sag’s structure background is similar to Weibei sag that is adjacent to Houzhen sag. During the deposition of Kong 2 member, three sedimentary facies are developed: fan delta, shore-shallow lake, semi-deep lake. Most of the study area is controlled by the shore and shallow lake sedimentary face, and the fan delta face is developed on the north and south margins of the study area, the semi-deep lake face distributes until the east of Shouguang uplift, the south of Hou 2 well and adjacent to Weihe fault, and is favorable to development of source rock. The source rock of Kong 2 member of Houzhen sag is poor to medium source rock, and its thermal evolution is in stage of quantity hydrocarbon generation. Combining with drilling and seismic data, the thickness of source rock of Kong 2 member up to 100 m covers an area of 530 square kilometers. The Monte-Carlo method is used to calculate the hydrocarbon resource based on existing data, the hydrocarbon resource amount is 0.238×108 t at medium risk. A parameter well is proposed for accurate evaluation of hydrocarbon-generating conditions and reservoir forming conditions of Kong 2 member in Houzhen sag.