The present study aims to evaluate the Paleocene to Early Eocene carbonates of the Dungan Formation in the Kirthar Fold and Thrust Belt, Pakistan for its paleo-depositional environment, sequence stratigraphy, and diagenetic effects on reservoir potential. The utilization of outcrop data for faunal identification and microfacies techniques helped in interpreting the paleo-environments and sequence stratigraphic framework. The microfacies analysis revealed that carbonates of the Dungan Formation in the Kirthar Fold and Thrust Belt represent a distal middle shelf-deep basinal settings of deposition. We documented a sea-level rise of second-order (spanning from Middle Danian to Ypresian) that in turn consists of a Transgressive Systems Tract (TST) and a Regressive Systems Tract (RST) of third-order cyclicity, spanning from Danian-Selandian and Thanetian-Early Ypresian respectively. The comparison with published data, the sea-level oscillations is influenced by eustacy and local tectonics. The hydrocarbon reservoir rock characterization of the carbonates is achieved by recording marine, burial, and meteoric diagenetic phases. The processes of cementation, micritization, neomorphism, and compaction occluded the effective porosity while dissolution and fracturing have enhanced the porosity and permeability of the rock unit. The petrographic evidence augmented by quantitative plug porosity and permeability data suggest poor to moderate reservoir potential of the carbonates of the Dungan Formation.