The Benxi Formation is one of the most important gas-producing layers in the Ganquan–Fuxian area, but the complex gas–water distribution and lack of sandstone have severely constrained natural gas exploration and development in this area. This study analyzed the structure, paleogeomorphology, sedimentary facies, reservoir closures, and gas–water distribution of the Benxi Formation in the study area through drilling, coring, logging, seismic surveying, and experimental testing. The results show that the gas reservoirs in the Benxi Formation are mainly lithologic traps distributed along NW-trending barrier sandstones, with a small portion of updip pinchout closures. The water layers are mainly composed of thin sandstones with a single-layer thickness of less than 2 m, which are tidal-channel or barrier-margin microfacies sandstones. The water saturation in some thick sandstones is related to the activity and destruction of large individual faults. The dry layers are tight sandstones with porosity of less than 3.2%, mainly associated with high amounts of volcaniclastic matrix and lithic fragments, as well as compaction. The charging of the underlying high-quality Ordovician limestone reservoirs by carboniferous source rocks in the Benxi Formation reduces the probability of gas accumulation in Benxi sandstone. Based on the control of sedimentary facies and physical properties on gas accumulation, favorable reservoir distributions were predicted using seismic attributes and gas detection methods, providing the basis for the next phase of natural gas exploration and development in this area.