This paper presents a gas-water two-phaseLaminar-Inertial-Turbulent (LIT) flow equation for watered-out gas wells, which can be solved through the incorporation of daily production, gas-water relative permeability and PVT data, and then Q (AOF) and formation factor (Kh) are obtained. Field case study in Long Wang Miao (LWM) water-drive gas reservoir shows that for watered-out gas wells, the single-phase LIT equation can result in overestimation of Q (AOF) by 30-80%. Water invasion performance can be relieved after reducing the production rate of watered-out gas wells, and water invasion behavior before breakthrough can be diagnosed with the decline trend of Kh values.