The company sent a letter to village residents saying it was applying for an extension to a license for exploration in the area but found natural fractures in Balcombe's shale that may prohibit fracturing, also called fracking.
"The presence of these natural fractures and the nature of the rock means that we do not intend to hydraulically fracture the exploration well," said a company letter published Thursday by the Guardian newspaper.
"While residents will undoubtedly be relieved that Cuadrilla has ruled out fracking at its Balcombe site, the community still faces the prospect of significant industrial activity on its doorstep," Brenda Pollack, regional campaigner for Friends of Earth, said in a statement Thursday.
Hydraulic fracturing is viewed as an environmental threat by some groups.
Cuadrilla was the target of widespread protests over its operations in Balcombe last year.
In September, the company said conventional drilling confirmed the presence of hydrocarbons at the site but further testing was needed to determine the reserve potential.