Venoco Inc.’s senior lenders will reduce its debt and restructure its balance sheet under the terms of a restructuring agreement, the company said March 18. About $1 billion of debt will be removed from the balance sheet.

Venoco voluntarily filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on March 18.

Sufficient liquidity will allow normal oil and gas activities and meet ongoing financial and regulatory obligations. Existing liquidity and cash from operations will, after approval from the bankruptcy court, support the company during the restructuring process.

Venoco’s founder Tim Marquez will remain executive chairman, providing leadership and advice after the restructuring.

"Today's announcement represents another significant step in our ongoing efforts to address the challenges before us and position the company for long-term success," said Mark DePuy, CEO.

After carefully evaluating our options, we have determined that the agreement to restructure our balance sheet and reduce our debt represents the best way to strengthen our finances and position ourselves for the future."

"While we continue to be in a strong cash position, the declining price of oil and the ongoing closure of Plains All American pipeline 901 continue to be serious problems. With this agreement, Venoco will be in a much stronger position to withstand these challenges and others that may follow," DePuy continued.

"Both during and after this process, Venoco will maintain the same commitment to safety, environmental protection and the communities in which we operate. Venoco is and continues to be a remarkable company with award winning operations, excellent employees and robust energy-producing assets."

Venoco Inc. is based in Denver.