The Baiyun Sag, located in the northern South China Sea, is rich in oil and gas. The marine mudstone in the Upper Oligocene Zhuhai Formation of the Upper Oligocene has not previously been considered as the main source rock and was thus selected for a thermocompression simulation experiment to verify its hydrocarbon generation potential. The experimental results were used to calculate the hydrocarbon generation kinetic parameters, and the hydrocarbon generation process of the marine mudstone was simulated. The mudstones of the Upper Oligocene Zhuhai Formation in the deepwater area of the Baiyun Sag are effective source rocks. The dark shallow marine mudstones of the Upper Oligocene Zhuhai Formation from well C generate hydrocarbons at a rate of 179.79 kg/ton of total organic carbon. As a set of active source rocks, the Upper Oligocene Zhuhai Formation has reached the low mature to mature stage and mainly generates oil in the marginal areas of the Baiyun Sag, whereas they have reached a highly overmature stage and generate both oil and gas in the central areas.