PetroChina's IR philosophy

Mao Zefeng has led the investor relations department at PetroChina for more than a decade.

In 2010 he won IR magazine’s best investor relations professional award for mainland China, amassing the most points of any IR professional across Greater China and South East Asia.

What has changed about IR in the last five years?

The biggest change at PetroChina in the past five years is that the company has increased the degree of information disclosure and enhanced communications with our shareholders.

For example, we added disclosure of quarterly operations and financial information, arranged more reverse roadshows among investors and invited shareholders to visit the company’s operations facilities.

PetroChina has also been using the online option on the IR section of our website more frequently to answer questions from investors. We put in efforts to ensure there is a 100 percent response rate to questions from investors.

Frankly speaking, the equity market in China is still developing. Some of the domestic investors are not very mature so engagement with them differs vastly from engagement with overseas investors.

In future, we plan to participate in more international investor meetings and one-on-one meetings to allow more opportunities for exchanging ideas with investors.

We also hope to be able to receive and host investors more often during their visits to our production facilities, so they can gain a good understanding of our company.

What does the PetroChina investor base currently look like?

Our parent, China National Petroleum Company (CNPC), holds around 86 percent of the company’s shares.

According to our latest statistics, in the non-CNPC investor base, our biggest shareholder category is institutional investors and securities firms, which hold approximately 83.3 percent of the remaining shares.

Fifty three percent of these investors are located in North America, 34 percent in Europe, and 13 percent come from the Asia-Pacific region.

Where do you go on your overseas roadshows?

We go wherever the roadshows are held. For instance, I went to Singapore to attend a roadshow organized by Deutsche Bank in May and to New York in June to attend a conference organized by JPMorgan, as well as paying visits to our shareholders in Boston, San Francisco and Los Angeles this year.

We prefer to meet with our shareholders to brief them about the company’s business development. We are also interested in seeing institutional investors with value investments.

What makes a good roadshow? Any tips for ensuring a successful trip?

A good roadshow is one that is well organized and prepared. A successful roadshow should include targeting investors, a clear picture of what you want investors to see, and preparation of what you like investors to see.

Who do you go on the road with?

In most circumstances, overseas roadshows are organized by the brokerages. During the first nine months of this year, we have completed more than 100 roadshows, one-on-ones and investor and analyst conference calls.

We have met thousands of investors, covering regions like Hong Kong, China, Singapore, Europe, Canada and the US. We prefer having security houses that have analysts covering PetroChina.

Does senior management go with you?

The company puts considerable effort into our investor relations work, and most of our senior management members devote themselves to IR, including our president Zhou Jiping, our CFO Zhou Mingchun and Li Hualin, our secretary to the board of directors. They will be participating in all types of company roadshows we consider to be appropriate.

Imagine the CEO, CFO and chief IRO of a US or European company have just landed at Shanghai Pudong International Airport. They are embarking on their first roadshow to mainland China. What three things would best prepare them for their meetings with Chinese investors?

I would like to encourage them to do the following: first, pick up the head executives you want to talk to. Second, there must be a growth theme in your story. Third, you have to be able to speak Mandarin, otherwise you will need to have an excellent (but expensive) interpreter with you.

What is the key IR issue for you at the moment?

We pay attention to oil prices, the global recession (especially the economic situation in the US and Europe’s debt crisis), the austerity measures carried out in China, and the policies from the Chinese government in relation to the oil & gas business. Most of these trends have impacts on our business performance.

The most important recent issue for our IR work was to obtain approval from the independent shareholders of the company for the new 2012-2014 connected transaction resolution at the October EGM.

The connected transaction with our parent company exists for historical, geographical, technical and beneficiary reasons. It is beneficial to PetroChina, but it is challenging for us to gain understanding and support from independent shareholders on this resolution.

Through our efforts to actively engage with our shareholders, by underlining the clear benefits of the connection transaction, enhancing communication and improving the quality of information disclosure, the resolution passed at the EGM.

What questions do investors want answered?

Most of the questions we receive from investors focus on the company’s development, outlook, business operations and financial performance, and the government regulations related to our business.

With our further development and outreach at the global level, we have also received inquiries about other issues such as international development, production safety, human rights and environmental protection.

Did you experience a spike in calls following the ConocoPhillips oil spill in Bohai Bay?

PetroChina gives priority to production safety. We address production safety and believe the most important resources in the world are human beings and the natural environment upon which they rely. The ideas of caring for life and protecting the environment have been integrated into our motto.

We stick to the principles that place importance on a people-oriented, prevention-driven approach; we advocate total participation and continuous improvement to pursue zero injuries, zero pollution and zero accidents. Our philosophy overall establishes a resource-saving, environmentally friendly and safe production enterprise.

It is very unfortunate the ConocoPhillips oil spill in Bohai Bay occurred. We have to learn a lesson from the accident – though the scale of the accident and subsequent pollution is much smaller than that of the BP Gulf of Mexico spill.

Does PetroChina have its own disaster scenario plan for such an incident, and how does the IR department fit into that?

We have oil spill prevention programs in relation to marine oil operations and the transport of oil by sea. We have also established a Marine Emergency Rescue Center, which is equipped with vessels and oil waste recycling facilities.

Our special contingency plan for offshore oil exploration emergencies and special contingency plan for environmental emergencies also include prevention programs for oil spills.

We conducted a special equipment safety inspection and rectified some of the problems identified after the Bohai Bay incident. The responsible units of the company are now looking at ways to improve the related systems and procedures in order to prevent similar incidents from happening again.

Our IR department has to ensure PetroChina has adequate communications and information sharing with investors regarding the complex and constantly changing environment and its effect on the company.

Our IR team makes proactive efforts to successfully convey the above messages to investors through a variety of means, including phone calls, email contacts and face-to-face meetings and discussions.