The Eocene Kosd Formation forms part of the Hungarian Palaeogene Basin. The coal measure of this formation was investigated using an 18 m drill core from borehole W–1. Petrographic and organic geochemical investigations (Rock-Eval pyrolysis, biomarker analysis) were performed in order to characterize the depositional environment, to determine the source of the organic matter within, and to assess the hydrocarbon generative potential. The presence of marine fossils, high TOC/S ratios and ash yields show that the deposition of the coal measure occurred in a marine delta with individual coal layers accumulating in low-lying, rheotrophic mires. The distribution of land plant-derived biomarkers demonstrates that the peat-forming vegetation was dominated by angiosperms, but the relative contribution of gymnosperms varied through time. In addition to land plants, algae and aquatic macrophytes contributed to the biomass. This dense vegetation established a CO 2-limited environment forcing aquatic plants to utilise HCO 3 − during photosynthesis. The marine environment, as well as the predominance of carbonate rocks in the hinterland, caused slightly alkaline conditions, which, together with reduced oxygen availability, stimulated sulphate-reducing bacterial activity and the microbial degradation of plant remains. Consequently, Kosd Formation coal is very rich in sulphur (up to 8.8%). Moreover, the coal contains vitrinite with a strong orange-brown fluorescence colour and swells strongly during pyrolysis. These features are typical for coals with marine influences. Vitrinite reflectance, Tmax, and biomarker proxies indicate that the organic matter is thermally mature and that the Kosd coal reached the high volatile bituminous rank in the deep borehole (~2.6 km depth). Rock-Eval parameters imply that the coal is gas- and oil-prone and reached the maturity threshold critical for first gas generation and the onset of oil expulsion.