This paper describes the multidisciplinary approach to reservoir characterization and the evolution of the simulation tools used for the Meillon field. This gas reservoir consists of vuggy limestone with natural fractures. In 1978, several wells located 700 m above the initial gas-water contact started producing water. Gas production suffered from increased water production. An integrated study was undertaken to gain insights into the water encroachment into a fractured reservoir. The merits of drilling fluid losses, open hole injectivity test, production logs, buildup tests, core examination and borehole imaging are investigated for the determination of the effective fracture spacing. Equally important is the attempt to infer the fracture distribution from the structural picture and the outcrop observations when the well data is missing. The block dimensions were found to range from 10 to 60 meters and are a key issue for the simulation. Special core analysis also proves to be critical. Despite a high residual gas saturation (65 % PV) and a very low matrix permeability, water encroachment into the matrix blocks can be significant due to a strong imbibition capillary pressure. A dual- porosity simulation was carried out which incorporates several refinements over the former single-porosity study. A good history match is obtained for the 25 wells. It shows that the water influx is weak. The results demonstrate that there is no actual microscopic gas trapping. This is due to large block dimensions and very low effective water permeabilities which slow down the water imbibition. It is concluded that the wells water-out because water by-passes the matrix gas through major fractures. Consequently the water will easily recede in the fractures with limited water withdrawals. In 1989 a water withdrawal well was equipped and a neighbouring gas producer was brought on stream again. After two years the gas production is 46 Mstd m3 and the water withdrawal is 100 000 m3. This significant gas production may be attributed to both former imbibition and water withdrawal.