The 75-year-old billionaire investor, who said his support for the company remained unchanged, will be replaced by Glen Ole Roedland, who has worked in shipping, oil, gas and other industries, Seadrill said.
The company, which is listed in Oslo and New York, only emerged from U.S. Chapter 11 bankruptcy proceedings in July 2018, after converting unsecured bonds to equity and extending maturities on $5.7 billion (£4.4 billion) of bank loans.
However, the market for drilling rigs has not recovered as expected, Chief Executive Anton Dibowitz said, forcing Seadrill to rethink how to deal with debts and liabilities amounting to $7.5 billion at the end of the third quarter.
He said it was "way too early" to say whether the company would need to undergo another round of bankruptcy proceedings and, as Seadrill's liquidity remained good for the time being, there was ample time to reach an agreement with creditors.
"We have had meetings with a large number of our banks...to discuss how we can together face the challenges the industry has with debt, and with debt that we specifically have," Dibowitz told Reuters.
"We have a very diverse group of banks, 42 in total. It's a fair combination of Nordic, Asian, European and American banks," he added, without naming those involved in the talks.
Seadrill's shares hit an all-time low of 10.50 Norwegian crowns in Oslo on Thursday and were trading 9.2% lower at 1255 GMT.
The company's net earnings remain deeply in the red. On Thursday, Seadrill announced asset impairments of $302 million, stemming from the New York Stock Exchange's (NYSE) decision in September to delist Seadrill Partners, in which Seadrill is an owner.
"While I have now decided to spend less time on board seats, my close involvement and strong support of Seadrill will remain unchanged," Fredriksen said in a statement, adding he would continue to push for consolidation of rig industry players.
As of Feb. 28, Fredriksen's Cyprus-registered Hemen Holding Ltd was Seadrill's largest shareholder with a 30.2% stake.
In the third quarter, Seadrill had 22 rigs idle out of 55 it owns or manages on behalf of its non-consolidated entities, such as Seadrill Partners, compared to 21 rigs idle in the previous quarter.
The company reported $85 million in quarterly adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), beating its outlook of $70 million-$75 million from August.
In the fourth quarter, adjusted EBITDA was expected to decline to $40 million, the company said.
(Editing by Sherry Jacob-Phillips, Edmund Blair, Kirsten Donovan)
By Nerijus Adomaitis and Terje Solsvik