Abstract: South Hua mountain and West Hua mountain located in the northwest margin of Liupanshan Basin: Haiyuan County. Ningxia. The strata developed there are lacustrine deposits, organic- riched dark mudstone of lower Cretaceous with a thickness of from 200m to 800m. The overlying strata are sandstone rudyte of Sikouzi formation (E₂₅); and mudstone. gypsum layers of Qingshuiying formation IE₃₉).The strata are ideal assemblages of source rock, reservoir and cap for oil. but commercial oil has not been found.Based on the analysis of samples and TTI calculations, the burial depth of oil-generating strata is not deep enough to reach the oil forming threshold. It was reported in 1986 that South and West Hua mourtains are the northeastern uprakss of nappe structure in Qilianshan fold belt. The mountains as a overthrust sheet, which's thickness is more than 3200m, upthrusted on the oil-generating strata and made the burial depth enlarged then the condition of temperature increasing is available and oil-generating threshold can be got into. Moreover, overthrust belt led to the formation of special oil and gas pool.The key work of this region is searching for structural traps under nappe structure by the aid of physical survey.