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Artificial gas-lift (AGL) technique is commonly used to enhance oil production when the reservoir pressure in wells is not enough to sustain acceptable oil flow rate. However, the gas-lift wells are prone to instability, characterized by regular oscillations of pressure and flow. This phenomenon is known as casing-heading instability. It results in production loss and negative impact on downstream equipment, and has been a challenging problem to both industry and academia. In this paper, a novel concept of optimal tracking control is proposed for stabilization and operating mode transition in gas-lift wells when casing-heading phenomenon occurs. The stability of artificial gas-lift process is ensured by manipulating both gas lift choke and oil production choke, where the openings of both choke valves can vary from fully closed to fully open. Through the simulation of the open-loop system, a stability map of AGL process is produced. Then a trajectory optimization algorithm is developed based on this stability map, which is synthesized with a tracking controller to achieve trajectory optimization control. Also, a nonlinear state observer is designed to ensure estimation of unmeasurable variables. Through simulation studies, the effectiveness of proposed trajectory optimization control is demonstrated. [ABSTRACT FROM AUTHOR]