Question-and-Answer Session
Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Kurt Hallead from RBC Capital Markets.
Kurt Hallead - RBC Capital Markets
Hi good morning.
Doug Rock - Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer
Hi Kurt.
Kurt Hallead - RBC Capital Markets
Good morning. Welcome aboard, John.
John Yearwood - Executive Vice President, President Smith Completion and Production
Thank you, Kurt, thank you.
Kurt Hallead - RBC Capital Markets
Hey Doug, your comments this morning regarding the outlook for '09 as much as it, maybe disappointed in that '09, not being above of '08. Other than the bigger picture comments that you outlined, how much of your business is backed by specific contractual obligations that kind of gives you that conviction to come out at this point especially in light of the spending touch we've been seeing?
Doug Rock - Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer
Yes, about 80% of M-I SWACO's eastern hemisphere businesses contract, but it's not the contract itself that gives the faith, because it's a kind of contract, where if they don't drill, they don't need to pay us. But the real underlying thing is the contract with the rig operator. Because on the deepwater even the in the medium water stuff, 40% of the cost of the project is the rig. So even when we are seeing big declines in prior years going back as much as 30 years, we have always seen the operator drill to the end of the rig contract, because why have 40% so on cost and get nothing out of it. So that's what gave us the real confidence the contract with the rig contract give then the secondary contract with us services that provided there.
Kurt Hallead - RBC Capital Markets
Okay. And your view point will be apples-to-apples on a pro forma basis if W-H were part of Smith for the full year?
Doug Rock - Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer
I don't understand the question.
Kurt Hallead - RBC Capital Markets
Just assuming if you look at '09, it will be above '08 that would assume on a pro forma basis that W-H were part Smith for all of '08 as well.
Doug Rock - Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer
- To read the full transcript on Seeking Alpha, click here »
