Bituminous shales of the Late Jurassic Madbi Formation from Shabwah depression in the south-eastern Sabatayn Basin has been collected and analyzed. The organofacies, paleo-sedimentary environmental conditions and oil generation potential are discussed based on combined geochemistry and petrology investigations. Biomarkers indicate that the bituminous-analyzed shales contain mainly marine phytoplankton algae and minor land plants and deposited under reducing environmental conditions. The rich in lipids from phytoplankton algae and land plants suggest high Type II to mixtures of Types II and Type III kerogen as the original organic facies during deposition. This is consistent with significant amounts of alginite and amorphous organic matter, with minor vitrinite land plants observed under microscope and hydrogen index (HI) values of 210–679 mg HC per g TOC and indicated good to excellent oil-source rocks. The presence of the reducing conditions during deposition consequently enhanced the preservation and subsequently gave rise to enrichment of organic matter in the analyzed bituminous shale as indicated by the relatively high TOC values between 1 and 14 wt%.The geochemical maturity indicators show that the analyzed bituminous shales have reached a low maturity stage, and commercial oils have not yet generated. Therefore, the results presented and discussed in this study suggest that the low maturity bituminous shales can be heated to crack the kerogens and subsequently significant amount of oil can be generated. This will lead to a huge alternative potential of unconventional resources and provide a sense of extending the exploration activities for both unconventional and conventional petroleum resources in the whole Basin.