Winning bids, new regulation and IR chatbots: Inside IR at PTT Exploration and Production
When asked to name the biggest challenge of the last 12 months, Nuchanong Sangkeaw, head of IR and capital markets at PTT Exploration and Production (PTTEP), finds it hard to pick just one.
The company, a subsidiary of Thailand’s state-owned oil and gas giant PTT, has been through a series of highs and lows over the last year, ranging from a record gas discovery to fighting market perceptions over a major new contract.
Despite these events, the IR team has also found time to experiment with new technology, including an IR chatbot powered by artificial intelligence. PTTEP was rewarded for its efforts in December when it won best use of multimedia for IR at the IR Magazine Awards – South East Asia.
Can you tell us a bit about yourself? What’s your background and how did you get into the IR industry?
My background is in accounting. I worked for an auditing firm and also in tax services in another accounting firm. I started at PTTEP in 2008 in the accounting department, and then I got rotated into the IR department in 2010.
I was the IR manager until early 2015, when I took personal leave for four years to be with my family – my husband got assigned to work in New York. PTTEP was kind enough to give me leave without pay for four years, and then I came back late last year and returned to the same position.
Tell us about your current role and responsibilities?
I’m currently an IR manager. I look after all the IR activities, including the communication activities from the company to the market: stock exchange notifications, compliance, quarterly reports, roadshows, and so on.
I also look after the communication back from the market. I report internally to the management and the board of directors on the feedback of the market and extraordinary news that relates to the company.
Recently, my role expanded to cover capital markets as well. This involves long-term capital structure and funding, like issuing bonds and liability management.
What does your typical day look like?
I usually start my day by going on my phone and reading all the news about the market, such as the oil price and industry activities. I think about whether the news will have an impact on the company and therefore whether I need to prepare an answer.
I update the team on news and whether we have communicated to the market on that topic before. Or, if something would be useful for the management team, I will summarize it and send it to management by text or in a short email.
And then there are some early morning calls or texts from sell-side analysis, depending on whether they are concluding reports or if certain things are happening in the market. Sometimes I haven’t read the news yet and I get it from the sell-side analyst.
The rest of the day is spent preparing things that are lined up from our usual activities, like roadshows or results. There’s always ongoing work that has to be done.
What has been your biggest challenge over the last 12 months?
In a few words, it’s the number of activities we have had as a company. The oil price has become more or less stable and there are many transactions being done, including for PTTEP. We have carried out $3 bn of M&A transactions this year. We also won a bid to extend exploration and production contracts in the Gulf of Thailand. And we have had the biggest gas discovery in the company’s history.
This has transformed us from a steady mode to a growth mode. Now, we are able to communicate on a cumulative annual growth rate of more than 5 percent, which we have not been able to communicate before.
What were the highs and lows of the bidding process?
The biggest highlight of the last year was winning the extension. It was the first ever extension bid round in the Gulf of Thailand and we won against Chevron. But on the day of the announcement, the stock price fell about 10 baht ($0.33) because the gas selling price we bid was lower than the market’s expectation.
We held a conference call that day, and then another the next week because we thought the market still didn’t quite understand our perspective. We also worked out some numbers and put them in a printed presentation to explain it in more detail.
We went on a roadshow in January – the month after the bidding process – and of course it was full of questions on this subject. We invited the managers in charge of the bidding to come along and explain our rationale face-to-face with investors.
We also did a site visit for analysts to our offshore platform to show that, with our capabilities, we are able to assume operatorship in the Gulf of Thailand.
What are some other issues investors and analysts are asking at the moment?
We now have a more imminent issue called IMO 2020, a regulation from the International Maritime Organization to lower the limit of sulfur content in marine fuels from 3.5 percent to 0.5 percent. This regulation will start on January 1, 2020. As we approach January, we are getting more and more questions on this.
If you use a lower-sulfur regulation, the high-sulfur fuel oil will not be used anymore. And our gas sales, which account for 70 percent of sales, are linked to high-sulfur fuel, so there’s a lot of concern on that. We have communicated the impact and mitigations to investors already, and of course have written about this in our MD&A.
We have also developed easy-to-understand charts in our presentation. They show the impact is not as dramatic as some would think, the change will have a lag time and the company has mitigations on the short and long-term effects. So that has lessened the concerns and worries of investors.
PTTEP won best use of multimedia for IR at the IR Magazine Awards – South East Asia 2019. How do you use technology as part of your IR program?
It’s always been part of our long-term strategy and work plan to apply technology as part of our program. We’ve started using a chat application called LINE, which is like WhatsApp, to communicate with analysts and the fund manager community. It’s quick and people use it all the time.
And then in 2019 we launched our IR application, and with that we have an IR chatbot, although it is only at an initial stage. You can have a chat and ask – for example – what’s your dividend policy? And it’ll answer you. You have to teach it the questions and the answers, and eventually it will get smarter. But you have to actually spend time to teach it before it gets smart.
This year, we’ve also done live video broadcasting for our analyst meetings.
If resources were no object, what would you like to do more of?
I would like to develop a more sophisticated chatbot, so people can have a quicker response when they ask for information. I think the resource we lack is time so we still haven’t had time to look into the details on that yet.
One more thing that would make life easier would be an immediate translator from Thai to English. We do analyst meetings in Thai – most of our audience are Thai analysts – and then we translate the transcript to English for our global investors. The meetings have a lot of technical language so it takes time to do an accurate translation.