Three-dimensional (3D) facies and petrophysical models were generated from previously published data of carbonate strata in the Dam Formation (eastern Saudi Arabia) to quantitatively investigate, describe, understand, model, and predict the permeability anisotropy of tidal flat carbonate within a sequence stratigraphic framework. The resulting 3D models were used to conduct fluid flow simulations to demonstrate how permeability anisotropy influences the production of hydrocarbons and ultimately affects decisions concerning future drilling in the exploration and development of carbonate reservoirs that have tidal flat strata. The constructed 3D facies model consists of four lithofacies associations, two of which were grain-dominated associations and two of which were mud-dominated associations. These lithofacies associations varied spatially in four reservoir zones (zones 1 to 4), which represent two fourth-order sequences in the uppermost part of the Dam Formation. Zones 1 and 3 consist of transgressive parasequences, and zones 2 and 4 consist of the regressive parasequences of these sequences. The 3D porosity and permeability models have a coherent match with the distribution of the lithofacies and the stratigraphic framework of the Dam Formation. The results suggested that the permeability anisotropy in zones 1 and 3 is controlled by the occurrence of the grain-dominated lithofacies associated with tidal flat channels. This lithofacies association overlies the sequence boundaries of sequences 1 and 3, forms reservoir bodies with relatively high permeability values, and is elongated perpendicular to the shoreline of the depositional environments. In contrast, permeability anisotropy in zones 2 and 4 is thought to be controlled by the occurrence of the grain-dominated lithofacies associated with the oolitic shoal. This lithofacies association overlies the maximum flooding surface of sequences 2 and 4, forms reservoir bodies with relatively high permeability values, and is elongated parallel to the shoreline of the depositional environments. Fluid flow simulation results suggested that the trend in hydrocarbon production from the constructed 3D models depends on permeability anisotropy in each reservoir zone. Thus, recognizing trends in permeability anisotropy, which might be predicted using sequences stratigraphy, could help to identify potential areas for future drilling.