US oil and gas producer Energy XXI has filed for bankruptcy protection in the US to strengthen balance sheet and reduce debt of more than $2.8bn amid plunging oil price.

Through the Chapter 11 restructuring, the firm is planning to reduce debt from its balance sheet, marking a step ahead in its efforts to respond to the challenging market environment.

The bankruptcy protection follows a restructuring support agreement signed by the company with holders of more than 63% of the company’s secured second lien 11.0% notes, on the terms of a debt-for-equity swap.

Energy XXI president and CEO John Schiller said: "Over the last several months, we have worked to actively manage our balance sheet, and after thoroughly evaluating our options with the help of our outside advisors, we determined that entering these agreements and implementing them through a court-supervised process is the best course of action for Energy XXI and all our stakeholders.

"Our production is on track as we continue to focus our operations on low-risk, high-reĀ­turn projects."

The oil and gas development and production company is planning to continue operations normally throughout the court-supervised financial restructuring process.

Acceding to Energy XXI, the restructuring support agreement will strengthen its financial position by reducing long-term debt and enhancing financial flexibility.

The firm said it has sufficient liquidity, including approximately $180m cash and funds generated from ongoing operations, to continue its operations during the financial restructuring process.