(Bloomberg) — Seadrill Ltd., the offshore drilling company controlled by billionaire John Fredriksen, beat earnings estimates after slashing costs while continuing talks with creditors.

Earnings before interest, taxes, depreciation and amortization fell to $557 million in the second quarter from $651 million a year earlier, the Hamilton, Bermuda-based company said Thursday. That exceeded the average $510 million estimated by analysts and forecast by the company itself.

“We have improved on the record uptime we achieved in the first quarter, reaching 98% economic utilization, whilst continuing to see our costs reduce quarter-over-quarter,” Chief Executive Officer Per Wullf said in a statement. While conditions remain “challenging,” volumes are returning to the spot market, he said.

Offshore rig companies have been among the hardest hit by a collapse in crude prices over the past two years as oil producers reduce spending on equipment and services. Rig owners including Seadrill and rival Transocean Ltd. have lowered expenses, delayed vessel deliveries and suspended dividends as dwindling income puts pressure on their ability to repay debt.

Seadrill fell 2.4% to 21.16 kroner as of 1:21 p.m. in Oslo trading, after earlier gaining as much as 2.6%. The shares are down 31% this year.

“There remains a complete dearth of contracting activity,” Exane BNP Paribas wrote in a report on Thursday. The company’s net debt is expected to be five times projected annual Ebitda this year and that is “unsustainable,” it said.

Seadrill had $9.1 billion in net interest-bearing debt at the end of the second quarter, and is talking to banks, bondholders and shareholders to reach a restructuring agreement by the end of the year. The company has identified a further $50 million in cost cuts, bringing expected cash savings in 2016 to $390 million, it said.

Seadrill said Ebitda will drop to $380 million in the third quarter and total $1.8 billion this year, implying a further decline to $335 million in the fourth quarter. Analysts expect Ebitda of $393 million and $349 million this quarter and next, respectively, according to Bloomberg surveys.

“In the third quarter we have a number of rigs running out and that will affect us,” Wullf said in an interview. Rig utilization “will probably deteriorate even further for all of us drillers, but a bottom has been reached for rates.”

Bloomberg News by Mikael Holter and Rakteem Katakey