Pulsed neutron‐neutron logging is a method that can determine water saturation by means of the formation macroscopic absorption cross section according to thermal neutron time spectra by using He‐3 detector. In this paper, the thermal neutron time spectrums under the conditions of different formation water salinity, porosity, saturation and borehole were simulated by using the Monte Carlo method. The relationship of formation macroscopic cross section and water salinity was studied. It is concluded that the suitable formation water salinity of the PNN logging is about 10 g/L to 100 g/L, and the suitable porosity minimum is about 10% when the formation water salinity measures up to 50 g/L in theory. The formation macroscopic absorption cross section was less affected by borehole fluid although thermal neutron count rate is different. The porosity can be determined by using the thermal neutron count ratio of two different spacing detectors. The evaluation method of matrix and water saturation is put forward according to the formation macroscopic absorption cross section versus porosity under the condition of different lithology and saturation, and then the oil, water and gas reservoir can be identified by the PNN logging. As a whole the PNN logging method is preferable to the low salinity and porosity over the other ways to determine the remaining oil saturation.