John Fredriksen-backed Seadrill has admitted that shareholders' equity could be wiped out in its latest restructuring.
The drillship and rig owner said talks continue over a refinancing in weak offshore markets.
The company delisted in New York in June and moved to the Oslo over the counter (OTC) market as it aimed for a second refinancing in two years as losses mounted.
In 2018, Seadrill emerged from a Chapter 11 restructuring. Fredriksen stepped down as chairman in November last year, retaining a 27% stake.
Seadrill said on Tuesday: "We continue to evaluate capital structure proposals from our financial stakeholders; whilst no agreement has been reached at this point it is expected that potential solutions will lead to significant equitisation of debt which is likely to result in minimal or no recovery for current shareholders."
Cash sufficient for now
Total cash stood at $1bn at the end of the second quarter, while debt was $7.4bn.
Seadrill believes it has enough liquidity to complete a comprehensive restructuring process. Business continues as usual in the meantime.
The second quarter net loss was $181m, against $1.56bn in the first quarter after a big fleet impairment.
Chief executive Anton Dibowitz said: "Global market sentiment for the quarter has been poor, as the real impacts of Covid-19 and reduced demand have begun to crystallise.
"While the industry-wide demand deficiencies remain outside our control, we have been concentrating our efforts on what we can influence, namely, our day-to-day operations and our capital structure."
Fleet utilisation was 97%, but revenue was down 14% at $277m due to lower management contract income.
During the quarter Seadrill added $41m to its charter backlog, which now stands at $2.3bn.
Hope for 2021?
"We are realigning our balance sheet by an increasing programme of recycling drilling rigs and engaging with our financial stakeholders to materially reduce our overall level of indebtedness," the company said.
Looking ahead, Seadrill added that depressed levels of offshore activity will remain throughout 2020 and into 2021.
"As a result, we foresee contracting activity to pickup in mid-2021, as projects that were put on hold due to Covid-19 return to market," the company said.
