An accurate analysis of the pressure and water inflow at the bottomhole of a gas well with free water influx is important for determining an optimized artificial lift method. The commonly used two-phase flow correlations based on steady-state flow have been successfully applied to gas wells in homogeneous reservoirs. However, for reservoirs with a high degree of heterogeneity, such as fractures, the existing techniques often fail due to the unsteady-state flow behaviour from reservoir to wellbore. This paper presents a new method that is derived based on the unsteady-state two-phase flow phenomena and the conservation of mass, taking into consideration the slippage effect of the two phases. In this method, the fluid flow is divided into a number of segments at which pressure drop and gas-liquid distribution under unsteady-state flow conditions can be calculated utilizing the measured data at the wellhead. In this case, more representative bottomhole pressures and water inflow rate changes with time can be calculated, permitting the selection of all optimum artificial lift method. The new method has been successfully tested. A field case is presented involving a gas well in the Sichuan Field in China. The results of the new calculation method and the steady-state calculations were compared with field measurements to determine the accuracy of the method.