In this work, a reservoir simulator is used to study the phenomena of gas percolation and gravity segregation, and their effects on reservoir performances. The sensitivity study of reservoir performance to block and time-step sizes shows that for typical solution-gas-drive reservoirs, large errors in average reservoir pressure may result from improper control of time-step in the simulator.The comparison of simulation results with the Tarner' s 1 method shows that the latter predicts faster reservoir pressure and oil saturation decline, and thus, undetpredicts the reservoir producing life and recovery.We propose a new material balance method for predicting the performance of thick, homogeneous, depletion-drive reservoirs. This method accounts for the vertical pressure and saturation gradients, and the secondary gas cap. The thickness of the secondary gas cap can be estimated with good accuracy using an idealized saturation profile. An iterative procedure relates average reservoir pressure to well pressure. The pressure and saturation at the well are then used to calculate the producing gas-oil ratio. The idealized saturation profile is also used to develop pseudo-functions to simplify the simulation of solution-gas-drive reservoir with gravity segregation.