Shares of Seadrill (SDRL - Get Report)  closed in the red, down by 55.56% to $0.74 on heavy trading volume of over 56 million shares vs. the monthly average of roughly 14 million shares, on Tuesday.

The offshore drilling contractor today warned that its debt restructuring process will result in significant losses for its shareholders and bond investors.

The company also said that it has reached an agreement with its banking group to extend its debt restructuring process to July 31 from April 30.

For an analysis of Seadrill, see Dump This Doomed Energy Stock... Pronto

Earlier, Seadrill said: "These extensions provide additional time for the company to further advance the ongoing negotiations with its banks, potential new money investors, and the advisers to the ad hoc committee of bondholders regarding the terms of a comprehensive restructuring plan... 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.

As a result, the company said they "currently expects that shareholders are likely to receive minimal recovery for their existing shares."

This story has been updated from 9:32 a.m. today.

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