UPDATE 2-Edge Petroleum files for Ch 11, to sell assets

* Edge Petroleum and units file for Chapter 11 bankruptcy

* Agrees to sell $191 mln in assets; proceeds to creditors (Adds background)

NEW YORK Oct 2 (Reuters) - Oil and gas producer Edge Petroleum Corp EPEX.O EPEXP.O said it had filed for Chapter 11 bankruptcy protection and agreed to sell nearly all its assets for $191 million to a group of natural gas buyers.

The deal to sell the assets to the group, named PGP Gas Supply Pool No. 3, is subject to approval by the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi, which will hold an auction as part of Edge's restructuring.

Edge Petroleum said it currently has about $226.5 million of outstanding principal under its credit agreement .

The entire proceeds will go to its creditors, Edge said.

It expects the bankruptcy court to enter a ruling in early December.

In August, Edge reported a net loss of $9.4 million, or 40 cents per share, bringing its losses for the first half of the year to $86.3 million, or $3.13 per share.

Shares of the Houston-based company were down 76 percent to 12.8 cents in noon trade Friday on Nasdaq. (Reporting by Matt Daily and Biswarup Gooptu in Bangalore; Editing by Vinu Pilakkott and Tim Dobbyn)