A method for efficient inversion of measured geophysical data from a subsurface region to prospect for hydrocarbons. Gathers of measured data (40) are encoded (60) using a set of non-equivalent encoding functions (30). Then all data records in each encoded gather that correspond to a single receiver are summed (60), repeating for each receiver to generate a simultaneous encoded gather (80). The method employs iterative, local optimization of a cost function to invert the encoded gathers of simultaneous source data. An adjoint method is used to calculate the gradients of the cost function needed for the local optimization process (100). The inverted data yields a physical properties model (110) of the subsurface region that, after iterative updating, can indicate presence of accumulations of hydrocarbons.