Offshore drilling company Seadrill Ltd. (NYSE: SDRL) posted second-quarter 2016 results before markets opened on Wednesday morning. The company reported diluted earnings per share (EPS) of $0.52 on revenues of $868 million. In the same period a year ago the company posted EPS of $0.77 on revenues of $1.06 billion. The consensus estimate from Thomson Reuters called for EPS of $0.42 on revenues of $884.15 million.

Excluding non-cash mark-to-market changes on derivatives, the company reported EPS of $0.59. Operating income slipped from $384 million in the year-ago quarter to $364 million and EBITDA fell from $651 million to $557 million. Net income dropped from $423 million to $276 million for the quarter and tumbled from $871 million in the first half of 2015 to $364 million in the first half of 2016.

Bermuda-based Seadrill is one of the world’s largest offshore drilling companies and part of the empire of shipping magnate John Fredriksen ,who also controls Frontline Ltd. (NYSE: FRO), among other shipping firms.

Per Wullf, CEO and president of Seadrill Management, said:

There continues to be a significant supply overhang and the market conditions remain challenging, however, there is some volume returning to the spot market, although primarily for short term work. Our priorities for the remainder of the year continue to be delivering safe and efficient operations for our customers whilst concluding on our financing plans

Seadrill reduced its interest-bearing debt load from $9.6 billion to $9.1 billion during the quarter, including the retirement of bonds valued at $105 million in and debt-for-equity swap. The company has reduced its headcount by 8%, and operating costs on the floater fleet have fallen 17% since December, and operating expenses on the jack-up rigs are down 28%.

Including drilling units owned and operated by Seadrill Partners LLC, the Seadrill Group owns 54 rigs, of which 41 are operating and 13 are idle. Total order backlog for the group amounts to $8 billion, of which Seadrill’s portion is $3.6 billion.

Reducing its workforce by 8% and slashing costs enabled the company to beat profit estimates for the second quarter. But there are eight rigs either coming off contract or facing more idle time in the third quarter, in addition to three others that will have sequentially lower day rates.

The company had this to say about its third quarter outlook:

With a number of our units coming off contract and the impact of lower day rates, EBITDA will be lower for the third quarter, at around $380 million. This is based on third quarter expected Operating Income of $183 million. … For the full year we expect EBITDA to be around $1.8 billion. This is based on expected Operating Income for the full year of $1.0 billion.

Seadrill’s shares traded up more than 3% in Thursday’s premarket to $2.61. The current 52-week range is $1.57 to $2.64. The consensus 12-month price target from Thomson First Call is $2.74.

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