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Image courtesy of Venoco.

Colorado-based private upstream Venoco has become the latest firm to file for bankruptcy protection, citing continued financial strain stemming from a 2015 pipeline spill in California.

The company said Friday that it has reached an agreement with its senior lenders to reduce its debt load and restructure its balance sheet.

Venoco cited low oil prices and the shutdown of Line 901 following a May 2015 oil spill in Santa Barbara as “serious problems” for the firm.

According to a court filing seen by Bloomberg, the shutdown also halted production at the company’s South Elwood Field located about two miles off the coast of Santa Barbara.

The Pipeline and Hazardous Materials Safety Administration said last month that preliminary findings indicate the spill was most likely caused by external pipeline corrosion.

The 48,000 barrel per day Line 901, operated by Plains All American, has been shutdown since the spill along with the nearby Line 903.

Venoco did not disclose the financial impact of the pipeline shutdowns.

“It is unfortunate that a third party pipeline spill has impacted Venoco, but this process will make it stronger and ensure its continued contributions to the Santa Barbara County community,” Venoco founder Tim Marquez.

Under the terms of the agreement, the company’s senior lenders have agreed to support a restructuring transaction that will eliminate about $1 billion of debt from Venoco’s balance sheet.

To facilitate the restructuring, Venoco filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on March 18.

The company expects to maintain all operations during the restructuring process.

“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 CEO Mark DePuy said.

The company said it has sufficient liquidity to continue its normal oil and gas activities and meet its ongoing financial and regulatory obligations.

Venoco expects existing liquidity and generated cash from ongoing operations will be used to support the company during the restructuring process once it receives approval from the Bankruptcy Court.

Marquez will remain executive chairman during the restructuring process and has been retained to “provide leadership and strategic counsel” to the firm after the restructuring is complete.