Embattled offshore oil rig contractor Seadrill (SDRL) - Get Report said it expects to file for bankruptcy protection despite winning some breathing space to renegotiate loans.

"We expect the implementation of a comprehensive restructuring plan will likely involve schemes of arrangement or Chapter 11 proceedings, and we are preparing accordingly," the company said in a statement on Tuesday. Seadrill also said its banks had extended a restructuring deadline by three months to July 31 and pushed back $2.85 billion of near-term debt maturities.

Seadrill stock fell sharply in the wake of the announcement as investors abandoned the already slim hope that talks, which have dragged on for more than a year and missed multiple deadlines, will salvage any value for equity holders.

Seadrill's Stockholm-listed shares have shed 55% of their value since Tuesday, when the latest extension was agreed, falling to 6.27 Swedish kronor (73 cents). The company also is listed on the New York Stock Exchange.  

Seadrill has almost $9 billion of debt, the offshore drilling sector's biggest debt burden, a result of massive investments in new platforms before 2014 that were made in the expectation of a continued boom in offshore drilling. Those hopes collapsed along with oil prices, which fell from more than $110 a barrel in 2014 to as low as $24 a barrel in 2016. The more recent rebound in oil prices to above $50 a barrel has helped oil companies improve earnings but remains too low to inject new life into the higher-cost offshore drilling sector.

Seadrill on Tuesday said that lenders had agreed to extend the maturity date on a $450 million credit facility due April 30 to Aug. 15. Another $400 million credit facility, due May 31, will now mature on Aug. 31, while a $2 billion loan due on June 30 has been extended to Sept 14.  

Seadrill's negotiations have been complicated by the number of lenders involved, including more than 40 banks, on top of its bondholders. The company initially had hoped to complete the so-called amend-and-extend talks by December, giving it more time to repay loans that fall due in 2017.  

"We currently believe that a comprehensive restructuring plan will require a substantial impairment or conversion of our bonds, as well as impairment, losses or substantial dilution for other stakeholders," Seadrill said in Tuesday's statement. "As a result, the company currently expects that shareholders are likely to receive minimal recovery for their existing shares."

Seadrill in January offered bondholders a deal that included a $700 million sale of new secured notes and a debt-for-equity swap of $1 billion of bonds. That rejected deal would all but have wiped out shareholders in a company whose total market capitalization was just $340 million, based on its Wednesday closing price.

Seadrill is 24% owned by its billionaire chairman, John Fredriksen.