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Update October 4. The New York traded ADRs of deep-water drilling specialist Seadrill (SDRL) are up huge this morning on reports that the company’s largest shareholder (at 23%), John Fredriksen, is willing to lend the rig company as much as $1.2 billion. The loan would be part of a package with banks and bondholders to restructure the company’s $9.1 billion in debt.

The ADRs (American Depositary Receipts) were up 29.14% to $2.78 as of 12:30 p.m. New York time.

Why the huge jump? Because of fears that Seadrill could be forced into bankruptcy before the deep-water drilling market turns. The company has set a goal of reorganizing its debt by the end of the year. The company faces a pressing September 2017 decline when $843 million in bonds come due. (The price of those bonds rose to 46.5 cents on the dollar today, the highest in more than two months.)

A big question for any investor thinking about taking the plunge on Seadrill is whether even after any debt restructuring, the company would still require a big infusion of equity. That threatens to dilute existing shareholders. (I’ve heard estimates of $1 billion or so. At today’s $2.78 an ADR that’s a lot of potential dilution.) The ADRs are a member of my Dividend portfolio where they show a 93% loss from my original pick.

I’d suggest thinking about any buy of Seadrill in two pieces. Stage 1 is any bounce from a successful reorganization of the company’s debt load. Relief that the company isn’t going into bankruptcy would lead to a major rally. A return to say $8 a share, the top of the 52-week range, would be a big gain from today’s price.

Stage 2 depends on an eventual recovery in the deep-water drilling market. Seadrill has one of the newest fleets with the most modern (and cost efficient) technologies so the company is an attractive asset in any recovery in this market. But that recovery is likely to be very extended since new rigs, ordered during the boom years for the sector, are still coming into service and exploration and drilling budgets at oil companies haven’t increased enough to push day rates higher. At best day rates to lease a rig have bottomed. (In the second quarter Seadrill reported earnings of 59 cents a share (above estimates of 41 cents a share) on reveu of $868 million. Revenue was down 24.3% year over year.)

My suggestion is to buy, if you can stand the risk and the uncertainty, for a Stage 1 rally and then recanvas your opinions to see how far off any Stage 2 recovery might be.