Abstract: AVO processing is to detect hydrocarbon by using amplitude information of seismic reflection. First, AVO forward modeling and analysis were carried out by using drilling data, then AVO processing of field seismic data were performed with optimal processing flow chart and preserved amplitude processing technology, and finally favorable zones for exploration were delineated based on AVO processing results and comprehensive analysis of various seismic and geologic data. This technology has provided reliable basic data for reservoir characterization in Yanqi basin. Actual drilling operation verified that AVO processing results formed a valuable decision basis for lowering drilling risk in this basin.