Penn Virginia Corp. (PVA) on Tuesday agreed to sell “substantially all” of its gassy Appalachian Basin portfolio, except the Marcellus Shale assets, to help fund development in the oily Eagle Ford Shale in South Texas.

The asset sale, to an undisclosed buyer for $100 million, includes vertical and horizontal coalbed methane and conventional properties, along with royalty interests in parts of West Virginia, Virginia and Kentucky. The properties had net production of 20 MMcfe/d in June, almost 100% weighted to natural gas.

“The divestiture of these noncore natural gas assets will substantially reduce our indebtedness, improve our liquidity and fund further investment in our oily Eagle Ford Shale play in which we have had continuing success,” said CEO H. Baird Whitehead. The Radnor, PA-based independent also plans to close its Canonsburg, PA, office to reduce corporate expenses, he added.

The sale, which is expected to close in mid August, is expected to cut PVA’s estimated 2012 production by 2.9 Bcfe. Third-party engineers at the end of 2011 estimated proved reserves associated with the divested properties were 105.7 Bcfe, 95% of which were proved developed and all natural gas.

In the Pennsylvania portion of the Marcellus, PVA has a midstream portfolio as well as an estimated drilling inventory of about 230 horizontal locations on 35,000 net acres in Potter and Tioga counties, as well as 17,000 net acres in other parts of the shale play. Year-end 2011 proved reserves were estimated at 39.8 Bcf, all of which were natural gas and 16% of which were developed.

The Eagle Ford portfolio includes about 25,000 net acres in Texas’ Gonzales and Lavaca counties, including acreage to be earned under an area of mutual interest agreement (AMI) in Lavaca County. PVA entered the play two years ago and has built an inventory of 250 well locations, with about five drilled as of June. PVA operates its acreage and has an 83% working interest (WI) in Gonzales County and at least a 57% WI in the recently added 8,000 net-acre AMI.

PVA in June had two drilling rigs operating in the Eagle Ford. The company estimated that at the end of 2011 the Eagle Ford portfolio held an estimated 60 Bcfe, or 10 million boe, of proved reserves that were 95% weighted to oil and natural gas liquids (NGL) and 49% developed.

“We had previously discussed the potential sale of our Midcontinent assets,” said Whitehead. “However, the preliminary bids we received for those assets were unacceptable, due likely to the recent substantial declines in NGLs and oil prices.” Because of the “higher operating income, cash flow and drilling opportunities associated with our Midcontinent properties as compared to Appalachia,” PVA now plans to retain the Midcontinent portfolio.