US oil producer Venoco has filed for bankruptcy protection, as the company struggles to sustain its revenues amid a slump in crude oil prices.

The company has reached agreement with its creditors to pursue a restructuring plan that aims to reduce its debt by $1bn.

Venoco CEO Mark DePuy said: "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."

Venoco has enough liquidity to carry out its normal oil and gas operations and meet its ongoing financial and regulatory obligations.

Venoco founder Tim Marquez will continue as executive chairman of the company during the restructuring process.

The senior lenders of Venoco have chosen to retain him to offer leadership and strategic counsel to the company after it emerges from restructuring.

The company failed to make an interest payment of $13.7m on senior unsecured notes that was due on 16 February.

The declining price of oil and the ongoing closure of Plains All-American pipeline have presented significant challenges for the company. Venoco’s production has decreased by over 50% due to the closure.

Venoco roped in Blackstone Advisory Partners in November 2014 to restructure the company.

"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," DePuy said.