After months of trying to sell the massive station and its water entitlement to governments and agricultural businesses, its chairman, Keith De Lacy, said the company would be handed to administrators today.

"In the end it was drought that beat us," he said. "We have only had one good season in the past five."

When full, Cubbie holds 530 billion litres, a similar capacity to Sydney Harbour.

Mr De Lacy said the company was struggling to satisfy a $320 million debt arrangement to the National Australia Bank, and he was confident going into administration would cause the least disruption to Cubbie's operations.

"We have discussed and have in-principle agreements with the voluntary administrators … [so] the business can continue to trade and we will work with them during the administration period," he said.

"This will allow the value in the assets to be realised in an orderly way, in the interests of all our stakeholders."

It was unclear last night what the development would mean for the sale of Cubbie and the Commonwealth's buyback of the water entitlement in the Murray-Darling river system.

A University of Adelaide water expert, Professor Mike Young, said it increased the chances of Cubbie's water entitlement returning to the environment.

"Whether that is through acquisition or the licences being cancelled, this … increases the chances that Cubbie's water will return to the river," he said.

An Australian Conservation Foundation spokeswoman, Dr Arlene Buchan, said the Commonwealth had new opportunities to explore with "state governments and other stakeholders".

The federal Water Minister, Penny Wong, would not comment on the shift to administration, but said the Government remained open to talks with any willing seller of water.

Water rules in Queensland, which insist on land and water entitlements being sold together, are known to have played a role in dousing Commonwealth interest in Cubbie.