Seadrill Ltd’s earnings beat forecasts as the Bermudian-domiciled offshore rig company controlled by billionaire John Fredriksen continues to cut costs and sees signs of improvement in a challenging market.

Third-quarter earnings before interest, tax, depreciation and amortisation fell to $441 million from $546 million a year ago, beating a $396 million estimate in a Bloomberg poll of 11 analysts, it said. That also beat its own estimate of $380 million. Its net loss narrowed to $657 million, after making a $882 million non-cash impairment for its investments in Seadrill Partners and Seamex.

Its shares rose as much as 8 per cent in Oslo and 8.8 per cent in New York yesterday.

“The offshore drilling market continues to be challenging, however, we are seeing an improvement in the level of bidding activity,” chief executive officer Per Wullf said in a statement. “2017 is expected to remain challenging. However, we expect the market to gradually improve as costs have been reset across the value chain and more drilling activity will be needed to avoid accelerated production declines.”

Seadrill and other offshore rig owners have been battered by a collapse in crude prices over the past two years, which has hurt demand for drilling at the same time as a wave of new rigs inflated supply. The company has suspended dividends, slashed costs, renegotiated contracts and delayed the delivery of new units to weather the downturn, but is also grappling with the industry’s heaviest debt-burden.

Seadrill last week pushed out the deadline for the conclusion of a restructuring process to the end of April, compared with early December previously, after extending a credit facility and making progress in talks that involve more than 40 banks in addition to bondholders. It provided no new details on the process in the third-quarter report, where it said net interest bearing debt was at $8.9 billion at the end of the period, down from $9.1 billion three months earlier.

Fredriksen, the company’s chairman and main shareholder, is willing to lend the company as much as $1.2 billion as part of a potential deal with banks and bondholders, people familiar with the matter said last month.

The “solid” third-quarter results were offset by a reduction of $144 million of the contract value for Seadrill’s West Jupiter rig, which is working for Total SA in Nigeria, Nordea AB said in a note to clients.

Seadrill expects Ebitda of about $340 million in the fourth quarter, it said late on Tuesday. Group backlog fell to $7 billion in the third quarter from $8 billion in the previous quarter, and it warned that most of new contracts being awarded were at or near cash-flow break-even levels.

“While our long-term view of the market for high specification drilling rigs remains positive, in the near term the offshore drilling sector remains extremely challenging,” the driller said.