The Neogene sedimentary successions of the Drava, Sava and Slavonija–Srijem depressions in the SW part of the Pannonian Basin Systemare built up of three 2nd order megacycles separated by four majorerosional unconformities. The first megacycle contains terrestrial tomarine syn-rift and early post-rift sediments of Early to Mid-Mioceneage. The second is built up of Late Miocene Lake Pannon deposits,while the third contains those sediments which were deposited inthe remnants of Lake Pannon and in the subsequent fluvial systems,in areas of continuous subsidence associated with basin inversionfrom the Pliocene onwards. Most of the petroleum source rocks andreservoir rocks are of Miocene age and were formed during the firstand second depositional megacycle. Conditions for the accumulationand preservation of large quantities of marine and terrigenousorganic matter were most favourable during the Badenian, Sarmatianand Early Pannonian, in deep basin settings, partly associated withrifting. The generation of hydrocarbons was promoted by relativelyhigh geothermal gradients during the initial and subsequent thermalsubsidence. Various sedimentary environments produced depositswith good reservoir characteristics: e.g. fault-related talus breccia(mainly Lower Miocene), reefs (mainly Badenian), coastal, shallowmarine (Karpatian, Badenian) and deltaic (Pannonian–Pontian) sandbodies or turbiditic sand lobes (mainly Pannonian). The hydrocarbon(HC) migration paths were often provided by the major unconformitiesbounding the three megacycles, as well as by faults, particularlyaround the basement highs.